HB 459 TRUSTS & PROPERTY TRANSFERS IN TRUST  JOE RYAN, legislative aide to Representative Al Vezey, sponsor of HB 459, asked Dick Thwaites to provide the committee with an overview of the legislation. SENATOR ELLIS asked why the sponsor was not available to testify on HB 459. MR. RYAN replied Representative Vezey was attending a House Judiciary committee hearing at this time. DICK THWAITES, an estate planning attorney, gave the following summary of HB 459. The measure addresses Alaska statutes in the area of trust and probate law (Title 13) and other related statutes, including the statute of frauds, the rule against perpetuities, and other sections of the code. The Alaska statutes are not comprehensive in the area of trust law; they are general and generic. HB 459 will create several types of trusts defined as irrevocable family trusts. They are asset protection trusts which essentially give the same protections to a family that a corporation gives to a business. Assets unencumbered by spousal or child support rights, creditor's claims, collateral interests of banks, could be transferred into a trust which would allow the grantor of the trust to be among the class of beneficiaries. Under present law, if a grantor is a beneficiary of an irrevocable trust, the grantor is deemed to have the power to control the trust, therefore it is accessible by the grantor's creditors. HB 459 will change the statute to allow the trust to be irrevocable and for the grantor to be among the class of beneficiaries. It would allow for a family nest egg, and provides an exception to the rule of perpetuities. Alaska is in a beneficial position in that it does not have a lot of trust law and case law to encumber the establishment of such trusts, as Missouri did. This type of trust will provide an alternative for individuals who might want to pass property to offshore trusts; Alaska would be the unique jurisdiction within the United States to accomplish that. This type of trust provides certain estate tax advantages yet does not avoid income, estate, or gift taxes. The fact that Alaska has no state income tax adds to its appeal as a situs jurisdiction. The trustee of the estate would have to be an Alaska resident (according to the Permanent Fund dividend definition), an Alaska Trust Company, an Alaska State bank with trust powers, or a national banking association with trust powers having its principle place of business in the State of Alaska. If large sums of money are transferred to Alaska, it is likely large banks will establish Alaska trust companies as wholy owned subsidiaries. BOB MANLEY testified on his own behalf in support of HB 459. He suggested the language "some or all" on page 2, line 11, and on page 3, line 1, be changed to approximately 10 percent of the trust assets to enhance the benefits to Alaska and its financial institutions. MR. THWAITES agreed with Mr. Manley's philosophy, but believed imposing such a limit would discourage clients. He suggested that change be considered in the future. SENATOR GREEN moved CSHB 459(JUD)am out of committee with individual recommendations. There being no objection, the motion carried.