03/04/2020 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB8 | |
| SB191 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 8 | TELECONFERENCED | |
| += | SB 191 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
March 4, 2020
1:33 p.m.
MEMBERS PRESENT
Senator John Coghill, Chair
Senator Peter Micciche, Vice Chair
Senator Shelley Hughes
Senator Lora Reinbold
Senator Jesse Kiehl
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 8
"An Act restricting the release of certain records of
convictions; amending Rule 37.6, Alaska Rules of Administration;
and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 191
"An Act relating to trusts and trustees, including trust
division, the powers of trustees, delayed gifts to trusts, and
community property trusts; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 8
SHORT TITLE: ACCESS TO MARIJUANA CONVICTION RECORDS
SPONSOR(s): SENATOR(s) BEGICH
01/16/19 (S) PREFILE RELEASED 1/7/19
01/16/19 (S) READ THE FIRST TIME - REFERRALS
01/16/19 (S) JUD
01/25/19 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
01/25/19 (S) Heard & Held
01/25/19 (S) MINUTE(JUD)
03/04/20 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 191
SHORT TITLE: TRUSTS, TRUSTEES, COMMUNITY PROPERTY
SPONSOR(s): SENATOR(s) COGHILL
02/14/20 (S) READ THE FIRST TIME - REFERRALS
02/14/20 (S) JUD
02/26/20 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
02/26/20 (S) Heard & Held
02/26/20 (S) MINUTE(JUD)
02/28/20 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
02/28/20 (S) Heard & Held
02/28/20 (S) MINUTE(JUD)
03/04/20 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR TOM BEGICH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of SB 8.
ALEX JORGENSEN, Intern
Senator Tom Begich
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a sectional analysis on SB 8,
version S, on behalf of the sponsor.
AIMEE BUSHNELL, Staff
Senator John Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Explained amendments to SB 191 on behalf of
the sponsor.
JONATHAN BLATTMACHR, Principal
ILS Management, LLC
Long Island, New York
POSITION STATEMENT: Answered questions during the hearing on SB
191.
DAVE SHAFTEL, Attorney
Shaftel Delman, LLC
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
191.
JAMIE DELMAN, Attorney
Shaftel Delman LLC; member
Alaska Trust & Estate Professionals, LLC
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
191.
ABIGAIL O'CONNOR, Attorney
O'Connor Law, LLC; Vice President
Alaska Trust & Estate Professionals
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on SB
191.
KEVIN WALSH, Certified Public Accountant; Co-Owner
Walsh, Kelliher & Sharp
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 191.
ACTION NARRATIVE
1:33:28 PM
CHAIR JOHN COGHILL called the Senate Judiciary Standing
Committee meeting to order at 1:33 p.m. Present at the call to
order were Senators Kiehl, Hughes, Reinbold, Micciche and Chair
Coghill.
SB 8-ACCESS TO MARIJUANA CONVICTION RECORDS
1:33:59 PM
CHAIR COGHILL announced that the first order of business would
be SENATE BILL NO. 8, "An Act restricting the release of certain
records of convictions; amending Rule 37.6, Alaska Rules of
Administration; and providing for an effective date."
CHAIR COGHILL said the bill had a hearing last session and
public testimony was heard and at that time, but he intended to
reopen it to allow several people to testify. He asked the
sponsor to present the bill.
1:34:59 PM
SENATOR TOM BEGICH, Alaska State Legislature, Juneau, Alaska,
sponsor of SB 8, introduced himself and his staff.
SENATOR BEGICH read the sponsor statement for SB 8:
Senate Bill 8 would make confidential the records of
individuals who have been convicted of minor marijuana
crimes, and no other crime. The records would
automatically be removed from CourtView. The records
would also be removed from some background checks
administered by the Department of Public Safety, if
requested by the individual.
In 2014, Alaskans voted to legalize the cultivation,
sale, and possession of marijuana for those 21 years
old or older. Despite this change in the law, some
Alaskans remain blocked from employment and housing by
previous marijuana possession convictions that would
no longer be a crime today.
According to a report prepared by Legislative
Research, there were more than 700 Alaskans convicted
of low level marijuana crimes between 2007 and 2017.
Those convictions can make obtaining housing and
gainful employment challenging. Now that voters have
legalized marijuana, this legislation would allow
those previously convicted to move on with their
lives, while ensuring those in the criminal justice
field still have access to needed background
information.
SB 8 would make confidential. Records removed from
CourtView and some records.
SENATOR BEGICH said the concept of SB 8 first emerged when he
was in a meeting discussing crime. The director of the Mountain
View Library pointed out that a number of people used the
library computers to apply for jobs but were unable to submit
applications because of the restrictions of the prior marijuana
conviction, even if the person had no record and no other crime
had been committed. A member of the Russian Jack Community
Council also indicated that he experienced difficulty obtaining
housing. Since last year's hearing, a number of states that have
decriminalized or legalized marijuana have taken action to do
something similar to SB 8 or have removed the conviction
altogether. This bill just asks that the conviction be shielded
from CourtView, he said.
1:39:01 PM
ALEX JORGENSEN, Intern, Senator Tom Begich, Alaska State
Legislature, Juneau, Alaska, reviewed the sectional analysis for
SB 8. He read:
Section 1 Describes the legislative intent to reduce
barriers to re-entry for those convicted of low-level
marijuana possession, which would no longer be
considered crimes today
1:39:56 PM
Section 2: Prohibits the Department of Public Safety,
and any designated reporting agency, from disclosing
any criminal records associated with possession of
less than one ounce of a schedule VIA controlled
substance conviction, covering both State Statute and
municipal ordinance, if requested. These cases will be
protected from disclosure only if marijuana possession
is the only crime for which the person was convicted
in a particular criminal case. A schedule VIA
controlled substance considered to have the lowest
degree of danger to users. Marijuana is the only VIA
drug.
Section 3: Limit access to Alaska Court System's
records of criminal cases involving convictions for
possession of less than one ounce of marijuana on
Court View.
Section 4: Indirectly amends Alaska Court System Rules
of Administration by limiting access to certain
criminal records.
He added that this pertains specifically to Rule 37.6.
Section 5: Because Section 4 indirectly amends a court
rule, this legislation will require a two-thirds vote
as described by the Alaska Constitution.
Section 6: Provides 120 days for this legislation to
take effect after bill signing, giving the Courts, as
well as affected agencies, time to change their
reporting protocols.
MR. JORGENSEN said this would allow the court time to implement
these changes and come up with a procedure for individuals
requesting those records be hidden.
1:41:35 PM
SENATOR BEGICH asked his staff to review the changes recommended
by the Department of Public Safety and the Alaska Court System.
He pointed out that the court system indicated that Sections 4
and 5 were unnecessary, so those sections will be removed in any
proposed committee substitute or amendment.
1:42:25 PM
MR. JORGENSEN reviewed the explanation of changes for SB 8 from
Version A to the proposed committee substitute for SB 8, version
S [not yet before the committee]. The bill title was modified on
page 1, lines 1-2:
• Page 1, lines 1-2: Removes reference to Rule 37.6 Alaska Rules of
Administration in the title. This is to conform with the removal of section 4 in
Version A, the Indirect Court Rule change.
â?¢ Page 1, line 9: Before “criminal history background”: delete the word “a” and
insert “certain types of”
MR. JORGENSEN explained that the background checks will not be
included for medical practices but will be required when the
Department of Public Safety (DPS) determines that it is
necessary that the records be accurately reflected.
MR. JORGENSEN continued to explain the changes:
â?¢ Page 1, lines 9-10: Delete “make it more likely” and insert “increase the
likelihood”
â?¢ Page 1, line 10: Delete “only” and insert “those”
• Page 1, line 11: Amends AS 12.62.160(b)(8) (Release and use of criminal justice
information). The new Section 2 of the bill is conforming language to include
changes made to new background check policy changed by SB 8.
â?¢ Page 1, line 12: Delete “Notwithstanding (b)(8) of this section, an agency may
not release records of a criminal case” and insert “An agency may not release
criminal history record information”
â?¢ Page 2, line 3: Insert new subclause that reads “(2) was 21 years of age or older at
the time of commission of the offence;” and renumber subclauses accordingly
â?¢ Page 2, line 3: Add the word “criminal” before the word “charges”
MR. JORGENSEN said this language will help to ensure that
records will be released if no other criminal charges are
involved.
1:44:21 PM
MR. JORGENSEN continued the sectional analysis:
• Page 2, lines 6-12: Delete all material and insert:
Sec. 22.35.040. Records concerning criminal cases for marijuana possession.
The Alaska Court System may not publish on a publicly available Internet website
the court records of a criminal case in which the defendant
(1) was convicted under AS 11.71.060, or a municipal ordinance with similar
elements, for possession of less than one ounce of a schedule VIA controlled
substance;
(2) was 21 years of age or older at the time of commission of the offense; and
(3) was not convicted of any other criminal charges in that case.
MR. JORGENSEN explained that the inserted language was from
House Bill 316 introduced during the 30th legislature.
1:44:41 PM
SENATOR BEGICH added that the Alaska Court System (ACS)
recommended the language changes to Sec. 22.35.040. It conforms
to a prior law considered by this legislature and the last
legislature. The original bill contained language that had the
same intent, but was not consistent with current law. He
deferred to the ACS to provide more detail.
MR. JORGENSEN continued to read from the document of
explanation of changes for SB 8, version A to Version S:
AS 22.35.040 Records concerning criminal cases for
marijuana possession. The Alaska Court system may not
publish on a publicly available website the court
records of a defendant who
(1) was convicted under AS 11.71.060, or a
municipal ordinance with similar elements, for
possession of less than one ounce of a schedule VIA
controlled substance.
(2) was 21 years of age or older at the time
of the commission of the offense.
MR. JORGENSEN said this would ensure that the convictions for
conduct that is now legal get expunged. However, the records for
an individual who is 18 years of age would not be concealed
because it is illegal for a minor to possess marijuana less than
one ounce. He reiterated that this provision would conceal
records for charges that are no longer considered criminal.
CHAIR COGHILL asked if there were any additional proposed
changes.
SENATOR BEGICH referred to [page 2] line 12. The proposed change
would add "criminal" before "charges" and renumber the paragraph
to paragraph (3).
• Page 2, line 13-23: Delete all material
He added that Sections 4 and 5 [page 2, lines 13-23] would be
deleted.
• Page 2, line 24: Change effective date to January 1, 2021
SENATOR BEGICH said Section 6, [page 2, line 24] would change
the effective date. He read, "This Act takes effect on January
1, 2021.
1:47:20 PM
CHAIR COGHILL said his intention was to incorporate these
changes into a committee substitute and hear from the Department
of Law and the Department of Corrections (DOC) at that time.
1:47:46 PM
SENATOR HUGHES asked if removing Sections 4 and 5 and changing
the effective date would result in a simple majority vote rather
than a two-thirds vote.
SENATOR BEGICH answered that he thought that was correct.
1:50:09 PM
CHAIR COGHILL offered that under the bill the conviction for
schedule VIA controlled substances would be on file, but would
not appear in CourtView.
CHAIR COGHILL stated that he would hold SB 8 in committee.
SB 191-TRUSTS, TRUSTEES, COMMUNITY PROPERTY
1:51:02 PM
CHAIR COGHILL announced the consideration of SENATE BILL NO.
191, "An Act relating to trusts and trustees, including trust
division, the powers of trustees, delayed gifts to trusts, and
community property trusts; and providing for an effective date."
He noted that in response to discussion during the previous
hearing, there were amendments for the committee to consider.
1:53:09 PM
CHAIR COGHILL moved to adopt Amendment 1, work order 31-
LS1370\A.1:
31-LS1370\A.1
Bannister
3/2/20
A M E N D M E N T 1
OFFERED IN THE SENATE BY SENATOR COGHILL
TO: SB 191
Page 6, line 22:
Delete "or a right accrued"
SENATOR MICCICHE objected for discussion purposes.
1:53:36 PM
AIMEE BUSHNELL, Staff, Senator John Coghill, Alaska State
Legislature, Juneau, Alaska, sponsor of SB 191, explained that
Amendment 1 will delete language from Section 7, the savings
clause. The savings clause states, "Notwithstanding sec. 6(b) of
this Act, this Act does not affect an action or proceeding begun
before the effective date of sec. 5 of this Act." This is
related to appreciation and income of community property. She
explained that community property is a way for married couples
to own property in certain states. Alaska is different from most
states.
She said in Alaska, married couples can elect to have some, or
all of their property treated as community property by stating
so in a written contract or a trust agreement. This type of
ownership in Alaska is not the default manner in which property
is held by married couples as it is in most other community
property states. If all of the couple's property is owned as
community property, then all assets purchased or acquired by a
couple during their marriage are owned equally by both spouses.
Debts also fall under the umbrella of community property in
certain circumstances. Because of the nature of community
property, everything that comes from community property such as
appreciation and income is usually treated as community
property. There are significant income tax benefits associated
with community property. She related a scenario to illustrate.
Assume a married couple purchased a building for $100,000 and
designated it as community property. Over time, the building
appreciated and is worth $1 million at the time of the husband's
death. Since the building is designated as community property,
the widow will receive full fair market value in the building
for $1 million. If she subsequently sells the building for $1
million, for income tax purposes it would be treated as though
she paid $1 million for the building instead of the actual
$100,000 paid. As a result, the widow would not pay any capital
gain taxes. Had the building been held 50/50 as non-community
property, the husband's one-half interest basis after adjustment
to fair market value would be $500,000, and the widow's 50
percent would have a $550,000 basis in the property instead of
$1 million. The widow would have capital gains on $450,000 due
to appreciation. Elimination of capital gains on appreciation at
death is the income tax benefit of community property.
MS. BUSHNELL explained that without clarification provided by
Amendment 1, in a divorce case a person's right to potentially
more than half of the property's appreciation and income will
have begun accruing when they set up the community property. The
sponsor does not wish to have any confusion on how community
property is treated.
1:56:43 PM
CHAIR COGHILL reiterated that Amendment 1 relates to an accrual
on community property.
1:57:13 PM
SENATOR MICCICHE removed his objection.
There being no further objection, Amendment 1 was adopted.
1:57:41 PM
CHAIR COGHILL moved to adopt Amendment 2, work order 31-
LS1370\A.2.
31-LS1370\A.2
Bannister
3/2/20
A M E N D M E N T 2
OFFERED IN THE SENATE BY SENATOR COGHILL
TO: SB 191
Page 6, line 26:
Delete "Sections 5 and 8"
Insert "Sections 5, 7, and 8"
SENATOR MICCICHE objected for discussion purposes.
1:57:55 PM
MS. BUSHNELL explained that Amendment 2 would provide an
immediate effective date to Section 7, the savings clause,
making it take effect immediately with Section 5, related to
community property, and Section 8, providing retroactivity. The
goal is to prevent the savings clause from having an effect on
any current court proceedings by providing the same effective
date as the other sections related to Section 7.
1:58:25 PM
SENATOR MICCICHE removed his objection.
There being no further objection, Amendment 2 was adopted.
1:58:44 PM
SENATOR KIEHL moved to adopt Amendment 3, work order 31-
LS1370\A.5.
31-LS1370\A.5
Bannister
3/2/20
A M E N D M E N T 3
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 191
Page 6, following line 5:
Insert a new subsection to read:
"(d) A person that sells to a third party a
promise that is treated as a note that becomes a
negotiable instrument under (c) of this section shall
provide written notice to the buyer that the note was
derived from a promise made under this section, that
consideration was not provided to the promisor, that
the note is not backed by assets or collateral, and
that the note is not guaranteed by the trustee or the
seller. The notice must be in at least 14 point bold
face type. A buyer may void the sale if notice is not
provided under this subsection."
CHAIR COGHILL objected for discussion purposes.
SENATOR KIEHL explained that Amendment 3 relates to a concern
raised at the last hearing related to the potential abuse
related to the "promise of a gift" to a trust which becomes a
promissory note in the bill. His initial suggestion was to limit
who could purchase the promissory notes to accredited investors
and regulated financial institutions, which would guarantee that
highly sophisticated investors would buy these promissory notes.
He worked with the sponsor's staff and advocates for the bill on
this compromise language. Amendment 3 uses a disclosure
approach. Someone used the term "caveat emptor" or "buyer
beware" but this amendment will ensure that the person buying
one of these notes is provided a disclosure about the nature of
the promissory note to make an informed decision. Amendment 3
would not limit who could buy or sell promissory notes, but it
will provide a "heads up" to potential buyers.
2:01:03 PM
JONATHAN BLATTMACHR, Principal, ILS Management, LLC, Long
Island, New York, said he believes that Mr. Shaftel and Ms.
O'Connor worked on the language in Amendment 3 and it is
acceptable.
2:01:49 PM
DAVE SHAFTEL, Attorney, Shaftel Delman, LLC, Anchorage, Alaska,
reviewed the language in Amendment 3 and described it as an
improvement to the bill.
2:02:41 PM
SENATOR MICCICHE offered his view that Amendment 3 was not
necessary and expressed concern about the language, "that the
note is not backed by assets or collateral, and that the note is
not guaranteed by the trustee or the seller." He asked what
would happen if the promise was backed by assets or collateral.
MR. SHAFTEL acknowledged that was a good point. He suggested
that there could be variable language in the disclosure
statement and if a [promissory] note was secured, the disclosure
could be modified.
CHAIR COGHILL related his understanding that these promissory
notes were purposefully not backed.
MR. SHAFTEL deferred to Mr. Delman.
2:04:28 PM
JAMIE DELMAN, Attorney, Shaftel Delman LLC; member, Alaska Trust
& Estate Professionals, LLC, Anchorage, Alaska, responded to
Senator Coghill's question on whether the promissory note is
backed. He pointed out that there are two separate transactions.
The first transaction is the initial promise to make a gift to
the Alaska Gift Trust. The second transaction, which Senator
Kiehl raised concerns about, is the potential of the unlikely
sale of that negotiable instrument to a third party after the
promise was made. Senator Micciche raised the concern that there
would not be any restriction on a trustee deciding to back the
promissory note with other assets of the trust, in the event of
a sale. The second sales transaction is separate from the
original gift transaction, he said.
CHAIR COGHILL summarized the explanation.
MR. DELMAN replied the second transaction would be related to
the first transaction, but it is not the same transaction.
SENATOR MICCICHE said his point is that the promise of a gift
might be secured by any number of methods. This language seems
to say the same written notice is required whether or not the
promise of a gift is guaranteed by the trustee or the seller. A
person may have a reason to make a promise for something that
has a set value, and that value may be different in the future
due to earnings potential that has a set value that is
guaranteed. This language seems to say that none of them will be
guaranteed. He offered that all of this would have a low
probability of happening, but if Amendment 3 makes someone feel
better, there should be a separation between a guaranteed
promise and one that is not guaranteed.
2:07:33 PM
MR. DELMAN agreed the committee could amend Amendment 3 to make
it clear that it does not prohibit guaranteeing the [promissory
note].
MR. DELMAN suggested the committee could amend Amendment 3, on
lines 6-7, to read, "that the note is not backed by assets or
collateral, and whether the note is guaranteed by the trustee or
the seller." He explained the proposed change, on line 7 to
delete "that" and insert "whether" and after "is" to delete
"not" before "guaranteed."
2:09:12 PM
At-ease.
2:10:15 PM
CHAIR COGHILL reconvened the meeting.
2:10:28 PM
SENATOR REINBOLD asked for a simple description and the
intention of Amendment 3.
SENATOR KIEHL explained that Amendment 3 would provide a notice
to consumers who potentially might buy a promissory note
[established by the Alaska Trust Gift]. He envisioned this would
probably pertain to family members of the person who established
the trust. However, the potential exists for someone to use the
note or negotiable instrument in unethical ways. The disclosure
would ensure that the potential buyer has a "heads up" to take a
closer look at the transaction. This approach would not limit
who can trade in these notes since doing so could present
problems for the trusts.
2:12:56 PM
CHAIR COGHILL explained that the concept is to make an
irrevocable gift to receive estate tax exemptions. The question
is if the language in the bill allows a person to do something
less than honorable by gifting without notifying potential
beneficiaries of the trust. He suggested that was a reasonable
concern.
SENATOR REINBOLD asked for the effect if a verbal commitment was
made. She asked who the testifiers were and what organizations
they represent.
2:14:43 PM
ABIGAIL O'CONNOR, Attorney, O'Connor Law, LLC; Vice President,
Alaska Trust & Estate Professionals, Anchorage, Alaska, stated
she has been involved in a group called Alaska Trust and Estate
Professionals, a group whose sole interest is helping to improve
Alaska's statutes regarding trusts and estates.
She advised that the promise to make a gift has to be in writing
and the [negotiable instrument] being sold would be a written
promise to a trust. These are safeguards in the bill. A person
cannot make a verbal promise under this statute.
2:16:42 PM
CHAIR COGHILL directed attention to Section 4, which is the
Alaska Gift Trust.
CHAIR COGHILL solicited a motion to withdraw Amendment 3 to
allow time to craft the sponsor's intent.
2:17:32 PM
SENATOR KIEHL withdrew Amendment 3.
SENATOR MICCICHE acknowledged the concerns raised. He offered
his view that making a buyer beware statement for every
promissory note that becomes a negotiable instrument is not
reasonable. He said he was willing to work with the sponsor on
language, but it had limited value.
CHAIR COGHILL announced that Amendment 3 is withdrawn.
2:18:40 PM
CHAIR COGHILL moved to adopt Amendment 4, work order 31-
LS1370\A.6.
31-LS1370\A.6
Bannister
3/3/20
A M E N D M E N T 4
OFFERED IN THE SENATE BY SENATOR COGHILL
TO: SB 191
Page 6, following line 5:
Insert a new subsection to read:
"(d) A married person who intends to make a
promise under this section shall give the person's
spouse 30 days' written notice that the person intends
to make the promise. The notice must adequately
disclose the terms of the promise, the amount of money
to be transferred, the name of the trust to which the
money will be transferred, the name and address of the
trustee of the trust, and the identity or a
description of the beneficiaries of the trust. The
person's spouse may waive the notice in writing."
SENATOR MICCICHE objected for discussion purposes.
2:19:14 PM
MS. BUSHNELL referred to page 6, line 5, and read Amendment 4,
which was crafted to address a member's concern. The purpose is
to add good practice without adding language that is too
restrictive and devalues the note. The goal is to help married
couples who intend to make gift trusts to have good
recordkeeping, so at the time of the promisor's death, the debt
against the estate will not come as a surprise and negatively
impact the surviving spouse or beneficiaries.
2:20:17 PM
SENATOR REINBOLD moved to adopt an amendment to Amendment 4, on
line 8, to delete, "The person's spouse may waive the notice in
writing."
CHAIR COGHILL objected for discussion purposes.
2:21:02 PM
SENATOR HUGHES said she would like to discuss the underlying
amendment to better understand the proposed amendment to
Amendment 4.
CHAIR COGHILL asked Mr. Delman if any technical legal or
practical challenges would arise from Amendment 4.
2:22:12 PM
MR. DELMAN asked why the committee would not want a spouse to
have the ability to waive the notice in writing. For example, if
the wife would like to promise to make a gift to a trust and
informs her husband and he agrees, the couple may not want to
wait 30 days to finalize the gift. He advised members that most
spousal rights allow for a written waiver in writing. He
questioned why this should be different.
SENATOR REINBOLD expressed concern that a spouse may have access
to his or her spouse's email. She asked if the written waiver
should have a notary requirement to make sure that the spouse is
involved.
2:23:43 PM
MR. DELMAN asked her to clarify the email example.
SENATOR REINBOLD expressed concern that the language does not
say how the notice could be waived, which might create potential
loopholes.
MR. DELMAN asked if she would be more comfortable if it was
amended to say the person may waive the notice in an
acknowledged writing.
SENATOR REINBOLD suggested that it should be notarized.
MR. DELMAN answered that adding notarized would be fine because
a waiver would typically be notarized.
CHAIR COGHILL questioned how that would affect the whole
amendment.
2:25:55 PM
SENATOR HUGHES asked whether the promise would be invalid if the
notice was not issued.
MR. DELMAN suggested that the committee may wish to amend
[Amendment 4] to provide that the promise of a gift is voidable
if proper notice has not been provided.
SENATOR HUGHES related a scenario to illustrate similar
concerns, such that in a second marriage a husband wants to gift
$10 million in community property to a trust for his children
from a prior marriage. She asked if the second wife would need
to acknowledge the gift by signing.
2:28:05 PM
MR. DELMAN asked if her scenario relates to community property
being gifted or if it is a promise to make a gift that is not
necessarily community property.
CHAIR COGHILL interjected that the amendment affects the promise
to make a gift to a trust under the new section of law. If the
scenario relates to trusts the committee may wish to clarify how
Amendment 4 generally would relates to trusts.
SENATOR HUGHES acknowledged that estates and trusts can get
sticky in second marriages, especially when one or both spouses
have children from the first marriage. For example, suppose a
written notice for the promise of a gift is issued, dated, and
signed, but put in a desk. Within 30 days of the issuance, the
bequeathing spouse passes away and the surviving spouse states
he or she did not get notice. She wondered if requiring
notarization would ensure that the surviving spouse is aware of
the gift such that both spouses must sign. She expressed concern
that the language in Amendment 4, "The person's spouse may waive
the notice in writing," could be interpreted to mean the spouse
could sign it after his or her spouse dies because she did not
receive any written notice.
2:31:06 PM
CHAIR COGHILL suggested that her questions are related to trusts
in general. Amendment 4 relates to a promise of a gift that must
be in writing and be signed by the person making the trust. The
language being deleted by the amendment to Amendment 4 is
intended to make sure that people affected by the trust will
receive notice, especially the person's spouse.
2:31:33 PM
SENATOR MICCICHE asked if there is a standard legal requirement
for the term "written notice."
2:32:00 PM
MR. DELMAN deferred the question to Ms. O'Connor.
2:32:24 PM
MS. O'CONNOR agreed that written notice is a formal term. She
recalled that AS 13.36.100 covered it, but her colleagues could
verify the statute. She reported that written notice for trust
proceedings are provided via the U.S. Postal Service, FedEx, and
United Parcel Service (UPS).
CHAIR COGHILL said the [amendment to Amendment 4] that is before
the committee [would delete the language], "The person's spouse
may waive the notice in writing." He asked if that could be
gamed, such that a person could be given a written notice that
wasn't sent to the proper address, or through duress or
misunderstanding the person did not understand the implication
of the notice.
MS. O'CONNOR answered that the notice could be gamed by a person
committing fraud, just as with any other legal document. She
explained that duress and undue influence apply to wills and
trusts and are a legal basis to invalidate any estate planning
document proven to be procured through fraud, duress, or undue
influence. This circumstance would not be any different.
She said requiring the document to be notarized could prevent
fraud but undue influence and duress in estate planning is
complex and can be a long standing issue in families, so it
cannot be prevented in statute. Instead, people must prove undue
influence occurred and undo the document.
MS. O'CONNOR explained that the reason for the express language
to waive the notice is because it could be burdensome for the
family to wait 30 days. She suggested that the waiver could be
removed if members are uncomfortable with it, or reduced to
perhaps 20 days. She acknowledged that 30 days was an arbitrary
number in the first place.
2:37:39 PM
CHAIR COGHILL suggested that members might need more
information.
2:37:52 PM
SENATOR MICCICHE referred to AS 13.36.100, which is trust law
and covers serving a report. He said how it is received is
covered in AS 13.06.120, but it does not go beyond written
notice to mention signing or anything more elaborate. Thus, the
written notice in Amendment 4 seems consistent with other trust
law.
2:38:55 PM
CHAIR COGHILL explained the intent of Amendment 4 is that when a
person makes a promise to transfer to a trust under AS
13.36.305, the new Alaska Gift Trust, the spouse would be given
written notice, in part, in case of estrangement or tension.
However, if none exists, the spouse could waive the notice in
writing. He asked the sponsor of the amendment to Amendment 4 if
that satisfied her question.
2:39:37 PM
SENATOR REINBOLD said she didn't have an issue with Amendment 4.
Her concern is to ensure that spouses are notified and consent
[to the promise of a gift]. She suggested that the entire trust
law should be tightened up and have more bookends.
CHAIR COGHILL said adding the language to allow the spouse to
waive the notice in writing would provide a means to show the
spouse was informed and in agreement. He suggested that taking
out the language could create ambiguity.
SENATOR REINBOLD asked if "in writing" could be a text or an
email and how one would identify the author. The person's spouse
may have access to passwords to his or her accounts. She
expressed concern that Amendment 4 might create some loopholes.
2:42:23 PM
SENATOR MICCICHE said he would be satisfied if the last sentence
provided acknowledgement for notification or waiving the notice
in writing. He suggested it could read, "The person's spouse
must acknowledge notification or waive the notice in writing."
That would provide notification either way.
CHAIR COGHILL interjected that there is language in Section 4 on
page 5, lines 19-20, which reads, "(2) the promise is in
writing, signed by the person, and delivered to the trustee of
the trust; ?" He explained that the [grantor/settlor] of the
trust must qualify, promise to make the gift in writing, sign
the document, and deliver it the trustee of the trust. He
suggested language, "The person's spouse may waive the notice in
writing, signed by the person, and delivered to ?" is to ensure
that it is actually acknowledged and delivered. He offered to
work on the language because he understood the concern that the
notice might be glossed over in some way.
2:44:30 PM
SENATOR HUGHES referred to page 5, line 19, which goes back to
the concern she raised earlier about the husband in a second
marriage giving $10 million to children from his first marriage.
The husband would sign the promise, but the second spouse would
not. She said she heard Senator Reinbold mention consent. She
pointed out that receiving notice should not be confused with
consent, unless acknowledgement is a term that could be
construed as consent. The language in Amendment 4 does not ask
the non-bequeathing spouse to consent, just to make the spouse
aware that the promise of a gift has been issued.
CHAIR COGHILL suggested the committee review who can make a
trust and the reason the person has the authority to do so and
identify the beneficiaries of the trust. He directed his staff
to work with committee members on language to provide a
safeguard for the surviving spouse. He emphasized that a spouse
has every right to make a trust under the bill, but it is
important to make sure that those affected by it are [notified]
because the trust is an irrevocable trust.
2:46:21 PM
CHAIR COGHILL solicited a motion to withdraw the amendment to
Amendment 4. He suggested that the committee could review
revised language for Amendment 3 and Amendment 4 at a later
meeting.
2:46:34 PM
SENATOR REINBOLD answered yes.
[The committee treated her response as a motion to withdraw the
amendment to Amendment 4.]
2:46:38 PM
CHAIR COGHILL withdrew Amendment 4.
CHAIR COGHILL remarked that it is important for members to
understand the context in which the amendments are made and be
sure that the notice requirements are clear.
2:47:09 PM
SENATOR MICCICHE asked members to consider that the spouse may
not have any legal right to the asset if it is not community
property. He remarked that it is nice to provide notice, but as
the sponsor works on new language for Amendment 4, it is
important to be careful not to create a right.
2:47:41 PM
SENATOR REINBOLD envisioned that a single person could be making
a trust for their children, but some beneficiaries might be
adversely affected. She suggested that requiring the notice to
be notarized would provide an additional safeguard.
2:49:22 PM
KEVIN WALSH, Certified Public Accountant; Co-Owner, Walsh,
Kelliher & Sharp, Fairbanks, Alaska, voiced support for SB 191.
All of his clients have Alaskan roots. His firm routinely
discusses community property options with their clients, and
many hold a significant part of their assets as elected
community property. His firm has seen firsthand the benefits
that community property options provide to Alaskan families. In
addition, the trusts routinely include unique Alaska trust
features and if not, his firm recommends the trusts be fixed
using Alaska's very modern trust laws. He offered his view that
the legislature's prior work in allowing community property and
unique Alaska trust provisions has benefited and will continue
to benefit members' constituents and his firm's clients, who are
Alaskans. SB 191 will improve the tools for Alaskans and others.
He commented that he was impressed by the manner of the
discussion today and the deference to the comments and concerns
of others.
2:51:45 PM
CHAIR COGHILL stated that committee work allows for a broad
latitude of discussion. He said it is important to ask how the
[Alaska Gift Trust] works and what can be done to improve it.
2:52:29 PM
CHAIR COGHILL stated that he would hold SB 191 in committee.
2:53:06 PM
There being no further business to come before the committee,
Chair Coghill adjourned the Senate Judiciary Standing Committee
meeting at 2:53 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Fiscal Note SB 8-DPS-CJISP2.28.20.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 8 |
| SB 191 Amendment A.1 3.3.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 191 |
| SB 191 Amendment A.2 3.3.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 191 |
| SB 191 Amendment A.5 3.3.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 191 |
| SB 191 Amendment A.6 3.3.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 191 |
| SB 8 Sectional Analysis 2.25.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 8 |
| SB 8 Sponsor Statement 2.25.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 8 |
| SB 8 Ver A 2.25.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 8 |
| SB 8 Supporting Document - State Marijuana Criminal Record Confidentiality Actions 2.25.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 8 |
| SB 8 Updated Supporting Document - Leg Research Report 3.4.2020.pdf |
SJUD 3/4/2020 1:30:00 PM |
SB 8 |