Legislature(2007 - 2008)BELTZ 211
05/01/2007 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB146 | |
| HJR15 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 148 | TELECONFERENCED | |
| *+ | SB 146 | TELECONFERENCED | |
| + | HJR 15 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS STANDING COMMITTEE
May 1, 2007
9:03 a.m.
MEMBERS PRESENT
Senator Lesil McGuire, Chair
Senator Gary Stevens, Vice Chair
Senator Hollis French
Senator Lyda Green
Senator Con Bunde
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 146
"An Act relating to the issuance of shares of professional
corporations to a trust, to trusts, to trustees, to the removal
of a trustee, to the compensation of a trustee and a person
employed by a trustee, to a trustee's accepting or rejecting a
trusteeship, to co-trustees, to a vacancy in a trusteeship, to
the resignation of a trustee, to delivery of trust property by
former trustees, to the reimbursement of trustee expenses, to
the certification of a trust, to the suitability of a trustee,
to the place of administration of a trust, to a trustee's power
to appoint property to another trust, to a change of the
percentage of trust property to be considered principal, to the
determination of the value of a trust, and to a settlor's intent
when transferring property in trust; amending Rules 54 and 82,
Alaska Rules of Civil Procedure; and providing for an effective
date."
MOVED CSSB 146(STA) OUT OF COMMITTEE
CS FOR HOUSE JOINT RESOLUTION NO. 15(STA)
Supporting the passage of a Filipino Veterans Equity Act and a
Filipino Veterans Family Reunification Act.
MOVED CSHJR 15(STA) OUT OF COMMITTEE
SENATE BILL NO. 148
"An Act relating to motor vehicle registration plates and fees
for Purple Heart recipients and Medal of Honor recipients; and
providing for an effective date."
SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 146
SHORT TITLE: TRUSTS
SPONSOR(S): STATE AFFAIRS
03/28/07 (S) READ THE FIRST TIME - REFERRALS
03/28/07 (S) STA, JUD, FIN
05/01/07 (S) STA AT 9:00 AM BELTZ 211
BILL: HJR 15
SHORT TITLE: WW II FILIPINO VETS:BENEFITS/IMMIGRATION
SPONSOR(S): REPRESENTATIVE(S) LEDOUX
03/29/07 (H) READ THE FIRST TIME - REFERRALS
03/29/07 (H) MLV, STA
04/03/07 (H) MLV REFERRAL WAIVED
04/10/07 (H) STA AT 8:00 AM CAPITOL 106
04/10/07 (H) Moved CSHJR 15(STA) Out of Committee
04/10/07 (H) MINUTE(STA)
04/11/07 (H) STA RPT CS(STA) 7DP
04/11/07 (H) DP: JOHNSON, JOHANSEN, GRUENBERG, DOLL,
COGHILL, ROSES, LYNN
04/13/07 (H) TRANSMITTED TO (S)
04/13/07 (H) VERSION: CSHJR 15(STA)
04/16/07 (S) READ THE FIRST TIME - REFERRALS
04/16/07 (S) STA
05/01/07 (S) STA AT 9:00 AM BELTZ 211
WITNESS REGISTER
MARIT CARLSON VAN DORT, Staff
to Senator Lesil McGuire
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 146 on behalf of Senator
McGuire, sponsor.
DOUGLAS BLATTMACHR, President
Alaska Trust Company
Anchorage, Alaska
POSITION STATEMENT: Supports SB 146.
DAVE SHAFTEL, Attorney
Tax and Estate Planning
Anchorage, Alaska
POSITION STATEMENT: Supports SB 146.
STEVEN GREER, Attorney
Anchorage, Alaska
POSITION STATEMENT: Supports SB 146.
CHRISTINE MARASIGAN, Staff
to Representative Gabrielle LeDoux
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HJR 15 on behalf of Representative
LeDoux, sponsor.
ACTION NARRATIVE
CHAIR LESIL MCGUIRE called the Senate State Affairs Committee
meeting to order at 9:03:06 AM. Senators McGuire, Green,
Stevens, and Bunde were present at the call to order. Senator
French arrived soon thereafter.
SB 146 - TRUSTS
9:03:39 AM
CHAIR MCGUIRE announced consideration of SB 146.
MARIT CARLSON VAN DORT, Staff to Senator McGuire, sponsor of SB
146, said Alaska has become one of the leading jurisdictions in
the country for trust administration and financial planning.
With that charge is the responsibility to constantly fine tune
the state's trust laws to remain competitive with other states
that have progressive trust legislation. Local banking
institutions have benefited from over 50 million dollars of
additional deposits because of Alaska's trust legislation as
well as increased business for trust companies, life insurance
agents, stock brokers, accountants, and attorneys. The state
also collects two million dollars of direct annual revenue. This
bill establishes provisions in current trust legislation that
will keep Alaska on the cutting edge of trust law in the United
States making them more user-friendly, and keeping litigation to
a minimum.
9:07:17 AM
DOUGLAS BLATTMACHR, President, Alaska Trust Company, testified
that he has been working to improve trust legislation in Alaska
since it was first established in 1997. Other states such as
Delaware, South Dakota, Rhode Island, Nevada, and Utah have
copied most of what Alaska has done. Thousands of Alaskans have
taken advantage of pieces of this legislation. He said good
trust legislation will continue to keep attracting business to
Alaska.
9:08:46 AM
SENATOR BUNDE asked for clarification on the ability to change
the value of income.
MR. BLATTMACHR replied that provision is primarily for a
charitable trust that will go on in perpetuity. Most of these
types of trusts provide that the charity gets the income from
the trust and therefore the only thing the charity can do is
invest in bonds which limits growth. A few years ago the statute
changed to allow the trustee to change the income payment to a
uni-trust payment which would be a percentage of value of the
trust. For example the charitable trust would get four percent
of the value. That means they can invest for growth. As the
trust fund grows the charity will get more money and there will
be more money there for the charity in the future.
SENATOR BUNDE said this is a "POIMB" concept.
MR. BLATTMACHR agreed.
9:09:47 AM
SENATOR FRENCH asked which section of the bill the value of
income change applies to.
MR. BLATTMACHR said it was addressed in section 12. CHAIR
MCGUIRE added that section 12 refers to AS 13.38.460(a).
SENATOR STEVENS, referring to section 7, asked Mr. Blattmachr to
comment on how quickly a trustee could be removed.
9:10:44 AM
MR. BLATTMACHR said typically if there is no provision in the
trust document, a person must go to court to remove a trustee.
The bill sets forth guidelines for removing a trustee, so it
could shorten the time it takes for removal and avoid court
action.
9:11:35 AM
CHAIR MCGUIRE asked to hear further testimony from attorneys
present on the question asked by Senator Stevens.
DAVE SHAFTEL, private attorney in tax and estate planning,
Anchorage, replied that section 7 is a default provision.
Default provisions are meant to fill in the gaps for inadequate
trusts. Many trusts that are drafted by either clients
themselves or by attorneys who don't work in the trust area may
be inadequate. The provision provides that a trust protector can
immediately remove a trustee that is not performing adequately
or is guilty of malfeasance. The provision does speed up the
process considerably and provides a number of different methods
for removing a trustee. Without this provision, attorneys can
only rely on case law, and if there is ambiguity in the case law
it can take much longer.
MR. SHAFTEL said in general, this is an important and
substantive bill for filling in trust and estate law covering a
variety of subjects that were previously absent from state
statutes. He urges its passage.
9:14:46 AM
SENATOR BUNDE, referring to previous testimony about Alaska
remaining competitive with other states, thought there could be
a point of diminishing returns. He is concerned about taking
action in an attempt to remain competitive that would be less
than optimum for the trustee.
MR. BLATTMACHR said that is not the case. He supports
legislation that is good for all parties involved, but primarily
is helpful to the beneficiaries of the trust.
SENATOR STEVENS asked Mr. Shaftel for clarification of
provisions in Section 7. For example, if Senator Stevens wrote
his own trust document without language for removal of a
trustee, would the provisions in this bill then be in effect on
his trust?
9:17:02 AM
MR. SHAFTEL answered yes, that's what is meant by default
provisions. If there was no language in the trust document
covering this subject, then the provision in this bill would
apply.
CHAIR MCGUIRE asked Mr. Shaftel to give an example where this
provision might be important.
9:17:51 AM
MR. SHAFTEL began with Senator Stevens' example whereby he
creates a trust and outlines in it something that is important
to him. For example, he creates a trust for the benefit of his
children with the assets to be used for their education, and
when they get to the age of 30 if there is anything left over it
is distributed to them. The trust may be bare bones and not
include any of the administrative provisions that specialists
who work in this area would include. If a client consulted an
attorney they would be asked how they wanted to handle various
situations such as removal, resignation, or compensation of a
trustee. These questions would be reviewed with the client and
provisions would be drafted to address the client's desires. In
Senator Stevens hypothetical trust none of those provisions
would be in place so the legislation would fill out the trust
document eliminating the need to go to court and ask a judge to
come up with an answer. It would also apply to someone who wants
to move their trust from outside the state to Alaska. If those
trusts were inadequate, these provisions would fill in for those
as well.
9:21:03 AM
SENATOR FRENCH asked for an explanation of paragraphs (d), (e),
(f), (g), and (h) of Sec. 13.36.079 on pages 9 and 10.
9:22:00 AM
MR. BLATTMACHR said many times a lending institution would like
to know if there is a trust in existence, but the person may not
want the institution to know the disposit provisions. These
sections say that the trustee can give a lending institution a
certification that a trust exists and the institution must rely
on that information.
SENATOR FRENCH said he is confused about paragraphs (f) and (g)
and asked for further clarification.
9:23:39 AM
MR. SHAFTEL said paragraph (f) is designed to allow a party to
provide a financial institution certain portions of information
relating to the trust document so the financial institution can
be certain that the trust exists and that they are dealing with
the trustees. They can then proceed for example, with a payment
from an account and not be responsible for making a mistake
because they don't have the full trust document. Many settlors
don't want to give the full trust document because it may
contain personal information they don't want to share. The
financial institution may have a portion of the trust instrument
but not enough to determine that the certification may be
erroneous. Under subsection (g), a firm reasonably relying on a
certification can proceed to collect their fees even if the
certification was incorrect.
9:29:01 AM
SENATOR FRENCH said he sees the logic except when looking at
lines 26-28 on page 9. He understands not impugning knowledge if
the person does not have the crucial part of the trust, but if
they hold the entire trust it is difficult to absolve them of
any knowledge.
MR. SHAFTEL said the point is well taken, and that sentence
should be clarified. Perhaps the committee should strike the
words "all or" on page 9, line 27.
9:30:08 AM
SENATOR FRENCH said the bill is going to the Judiciary Committee
and it can be worked on there. He wants to flag that as an area
of concern.
SENATOR BUNDE said since 1997 there have been 15 bills
addressing this topic. He asked if this will take care of it or
will something new come up in the trust area next year.
MR. SHAFTEL said when he started practicing law in this area
Alaska's trust statutes were very bare. The Uniform Probate Code
was about all that existed. The statutes being proposed such as
this one are not novel or risky. They simplify and clarify, and
provide for ease of administration of estates and trusts. Other
bills may well be seen in the future that will improve this area
of the law tremendously. The result will be good, solid estate
law for Alaska residents and for those considering transferring
their business here.
9:34:19 AM
SENATOR BUNDE said he is encouraged to hear that the law is
solid. He asked if this is an evolving area of the law or if it
is settled.
MR. SHAFTEL replied some areas of trust and estate law go back
to old English common law so that's pretty settled, but because
trust and estate laws are so dependent on taxation and the
principles go so far back, they sometimes need to be modernized.
As tax law changes there are modifications that are appropriate.
There will be continuing change for the good.
9:36:52 AM
SENATOR BUNDE asked if there is opposition to the bill.
MR. BLATTMACHR answered he is not aware of any opposition.
CHAIR MCGUIRE moved to amend SB 146 striking the words "all or"
on page 9, line 27. Hearing no objections, Amendment 1 carried.
STEVE GREER, Attorney, said this bill is just catching up with
the laws of other states. These provisions fill in the blanks
when the trust document doesn't articulate how certain matters
should be resolved. Beth Chapman, the primary draftsman of this
bill, took most of these provisions from uniform trust code that
was passed by the National Commission on Uniform State Laws.
This is good legislation and he strongly urges its passage.
CHAIR MCGUIRE closed public testimony on SB 146.
9:39:07 AM
CHAIR MCGUIRE said this bill is on the House floor today and she
would like to move the bill on to Judiciary Committee. She
thanked all the parties involved for their contributions
bringing the bill before the legislature.
SENATOR GREEN moved to report SB 146, as amended, from committee
with individual recommendations and accompanying zero fiscal
note. Hearing no objections, CSSB 146(STA) moved from committee.
HJR 15 - WW II FILIPINO VETS:BENEFITS/IMMIGRATION
9:40:22 AM
CHAIR MCGUIRE announced consideration of HJR 15. [Before the
committee was CSHJR 15(STA).]
CHRISTINE MARASIGAN, Staff to Representative Gabrielle LeDoux,
sponsor, said HJR15 supports the passage of the Filipino
Veterans Equity and Filipino Veterans Family Reunification Acts
that are currently in Congress. The bills reinstate the benefits
that were promised to Filipino World War II veterans that were
rescinded in 1946. It also allows families of immigrated
veterans into the United States beyond the current immigration
policy quota.
9:41:32 AM
REPRESENTATIVE GABRIELLE LEDOUX, Sponsor of HJR 15, encouraged
passage of the bill out of committee.
CHAIR MCGUIRE closed public testimony.
SENATOR FRENCH moved to report CSHJR 15(STA) from committee with
individual recommendations. Hearing no objections, the motion
carried.
CHAIR MCGUIRE adjourned the committee at 9:42:47 AM.
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