HB 101: "An Act relating to certain irrevocable transfers in trust, to the jurisdiction governing a trust, to challenges to trusts or property transfers in trust, to the validity of trust interests, and to transfers of certain trust interests; and providing for an effective date."
00HOUSE BILL NO. 101 01 "An Act relating to certain irrevocable transfers in trust, to the jurisdiction 02 governing a trust, to challenges to trusts or property transfers in trust, to the 03 validity of trust interests, and to transfers of certain trust interests; and providing 04 for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 13.12.205(2) is amended to read: 07 (2) property transferred in any of the following forms by the decedent 08 during marriage: 09 (A) an irrevocable transfer, including an irrevocable transfer 10 in trust with a transfer restriction under AS 34.40.110(a), in which the 11 decedent retained the right to the possession or enjoyment of, or to the income 12 from, the property, if and to the extent the decedent's right terminated at or 13 continued beyond the decedent's death; the amount included is the value of the 14 fraction of the property to which the decedent's right related, to the extent the
01 fraction of the property passed outside probate to or for the benefit of a person 02 other than the decedent's estate or surviving spouse; 03 (B) a transfer in which the decedent created a power over the 04 income or property, exercisable by the decedent alone or in conjunction with 05 another person, or exercisable by a nonadverse party, to or for the benefit of 06 the decedent, the decedent's creditors, the decedent's estate, or creditors of the 07 decedent's estate; the amount included with respect to a power over property 08 is the value of the property subject to the power, and the amount included with 09 respect to a power over income is the value of the property that produces or 10 produced the income, to the extent the power in either case was exercisable at 11 the decedent's death to or for the benefit of a person other than the decedent's 12 surviving spouse or to the extent the property passed at the decedent's death, 13 by exercise, release, lapse, default, or otherwise, to or for the benefit of a 14 person other than the decedent's estate or surviving spouse; if the power is a 15 power over both income and property and the preceding provision defining the 16 amount included produces different amounts, the amount included is the greater 17 amount; and 18 * Sec. 2. AS 13.36.035(a) is amended to read: 19 (a) The court has exclusive jurisdiction of proceedings initiated by interested 20 parties concerning the internal affairs of trusts, including trusts covered by (c) of this 21 section. Except as provided in (c) and (d) of this section, proceedings that [. 22 PROCEEDINGS WHICH] may be maintained under this section are those concerning 23 the administration and distribution of trusts, the declaration of rights, and the 24 determination of other matters involving trustees and beneficiaries of trusts. These 25 include [, BUT ARE NOT LIMITED TO,] proceedings to 26 (1) appoint or remove a trustee; 27 (2) review trustees' fees and to review and settle interim or final 28 accounts; 29 (3) ascertain beneficiaries, determine any question arising in the 30 administration or distribution of any trust including questions of construction of trust 31 instruments, instruct trustees, and determine the existence or nonexistence of any
01 immunity, power, privilege, duty, or right; and 02 (4) release registration of a trust. 03 * Sec. 3. AS 13.36.035 is amended by adding new subsections to read: 04 (c) A provision that the laws of this state govern the validity, construction, and 05 administration of the trust and that the trust is subject to the jurisdiction of this state 06 is valid, effective, and conclusive for the trust if 07 (1) some or all of the trust assets are deposited in this state and are 08 being administered by a qualified person; in this paragraph, "deposited in this state" 09 includes being held in a checking account, time deposit, certificate of deposit, 10 brokerage account, trust company fiduciary account, or other similar account or deposit 11 that is located in this state; 12 (2) a trustee is a qualified person who is designated as a trustee under 13 the governing instrument or by a court having jurisdiction over the trust; 14 (3) the powers of the trustee identified under (2) of this subsection 15 include or are limited to 16 (A) maintaining records for the trust on an exclusive basis or 17 a nonexclusive basis; and 18 (B) preparing or arranging for the preparation of, on an 19 exclusive basis or a nonexclusive basis, an income tax return that must be filed 20 by the trust; and 21 (4) part or all of the administration occurs in this state, including 22 physically maintaining trust records in this state. 23 (d) The validity, construction, and administration of a trust with a state 24 jurisdiction provision are determined by the laws of this state, including the 25 (1) capacity of the settlor; 26 (2) powers, obligations, liabilities, and rights of the trustees and the 27 appointment and removal of the trustees; and 28 (3) existence and extent of powers, conferred or retained, including a 29 trustee's discretionary powers, the powers retained by a beneficiary of the trust, and 30 the validity of the exercise of a power. 31 (e) In (d) of this section, "settlor" means a person who transfers property in
01 trust; "settlor" includes a person who furnishes the property transferred to a trust even 02 if the trust is created by another person. 03 * Sec. 4. AS 13.36.045(a) is amended to read: 04 (a) The court will not, over the objection of a party, entertain proceedings 05 under AS 13.36.035 involving a trust registered or having its principal place of 06 administration in another state, unless 07 (1) all appropriate parties could not be bound by litigation in the courts 08 of the state where the trust is registered or has its principal place of administration; 09 [OR] 10 (2) the interests of justice otherwise would seriously be impaired; or 11 (3) the trust satisfies AS 13.36.035(c). 12 * Sec. 5. AS 13.36 is amended by adding new sections to read: 13 Sec. 13.36.310. Challenges to trusts. Except as provided in AS 34.40.110, 14 a trust that is covered by AS 13.36.035(c) or that is otherwise governed by the laws 15 of this state, or a property transfer to a trust that is covered by AS 13.36.035(c) or that 16 is otherwise governed by the laws of this state, is not void, voidable, liable to be set 17 aside, defective in any fashion, or questionable as to the settlor's capacity, on the 18 grounds that the trust or transfer avoids or defeats a right, claim, or interest conferred 19 by law on a person by reason of a personal or business relationship with the settlor or 20 by way of a marital or similar right. In this section, "settlor" means a person who 21 transfers property in trust; "settlor" includes a person who furnishes the property 22 transferred to a trust even if the trust is created by another person. 23 Sec. 13.36.390. Definitions. In AS 13.36, 24 (1) "qualified person" means 25 (A) an individual who, except for brief intervals, military 26 service, attendance at an educational or training institution, or for absences for 27 good cause shown, resides in this state, whose true and permanent home is in 28 this state, who does not have a present intention of moving from this state, and 29 who has the intention of returning to this state when away; 30 (B) a trust company that is organized under AS 06.25 and that 31 has its principal place of business in this state; or
01 (C) a bank that is organized under AS 06.05, or a national 02 banking association that is organized under 12 U.S.C. 21 - 216d, if the bank 03 or national banking association possesses and exercises trust powers and has 04 its principal place of business in this state; 05 (2) "state jurisdiction provision" means a provision that the laws of this 06 state govern the validity, construction, and administration of a trust and that the trust 07 is subject to the jurisdiction of this state. 08 * Sec. 6. AS 34.27.050(a) is amended to read: 09 (a) A nonvested property interest is invalid unless 10 (1) when the interest is created, it is certain to vest or terminate no later 11 than 21 years after the death of an individual then alive; [OR] 12 (2) the interest either vests or terminates within 90 years after its 13 creation; or 14 (3) the interest is in a trust and all or part of the income or 15 principal of the trust may be distributed, in the discretion of the trustee, to a 16 person who is living when the trust is created. 17 * Sec. 7. AS 34.40.010 is amended to read: 18 Sec. 34.40.010. Invalidity generally. Except as provided in AS 34.40.110, 19 a [A] conveyance or assignment, in writing or otherwise, of an estate or interest in 20 land, or in goods, or things in action, or of rents or profits issuing from them or a 21 charge upon land, goods, or things in action, or upon the rents or profits from them, 22 made with the intent to hinder, delay, or defraud creditors or other persons of their 23 lawful suits, damages, forfeitures, debts, or demands, or a bond or other evidence of 24 debt given, action commenced, decree or judgment suffered, with the like intent, as 25 against the persons so hindered, delayed, or defrauded is void. 26 * Sec. 8. AS 34.40.110 is repealed and reenacted to read: 27 Sec. 34.40.110. Restricting transfers of trust interests. (a) A person who 28 in writing transfers property in trust may provide that the interest of a beneficiary of 29 the trust may not be either voluntarily or involuntarily transferred before payment or 30 delivery of the interest to the beneficiary by the trustee. In this subsection, 31 (1) "property" includes real property, personal property, and interests
01 in real or personal property; 02 (2) "transfer" means any form of transfer, including deed, conveyance, 03 or assignment. 04 (b) If a trust contains a transfer restriction allowed under (a) of this section, 05 the transfer restriction prevents a creditor existing when the trust is created, a person 06 who subsequently becomes a creditor, or another person from satisfying a claim out 07 of the beneficiary's interest in the trust, unless the 08 (1) transfer was intended in whole or in part to hinder, delay, or 09 defraud creditors or other persons under AS 34.40.010; 10 (2) trust provides that the settlor may revoke or terminate all or part 11 of the trust without the consent of a person who has a substantial beneficial interest 12 in the trust and the interest would be adversely affected by the exercise of the power 13 held by the settlor to revoke or terminate all or part of the trust; in this paragraph, 14 "revoke or terminate" does not include a power to veto a distribution from the trust, 15 a testamentary special power of appointment or similar power, or the right to receive 16 a distribution of income, corpus, or both in the discretion of a person, including a 17 trustee, other than the settlor; 18 (3) trust requires that all or a part of the trust's income or principal, or 19 both, must be distributed to the settlor; or 20 (4) at the time of the transfer, the settlor is in default by 30 or more 21 days of making a payment due under a support judgment or order for a child of the 22 settlor. 23 (c) The satisfaction of a claim under (b)(1) - (4) of this section is limited to 24 that part of the trust to which (b)(1) - (4) of this section applies. 25 (d) Notwithstanding a provision in the trust instrument to the contrary, when 26 a distribution is declared by and payable from a trust, the child support enforcement 27 agency established under AS 25.27 may enforce the support obligations of a 28 beneficiary, including a trust settlor who is a beneficiary, of the trust against the 29 portion of the distribution to which the beneficiary is entitled. 30 (e) In this section, "settlor" means a person who transfers real property, 31 personal property, or an interest in real or personal property, in trust.
01 * Sec. 9. This Act does not apply to a trust unless the trust is created on or after the 02 effective date of this Act. 03 * Sec. 10. This Act takes effect immediately under AS 01.10.070(c).