Legislature(2001 - 2002)
03/19/2001 01:44 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 34-RULE AGAINST PERPETUITIES
REPRESENTATIVE LESIL MCGRUIRE, sponsor of HB 34: Thank you Mr.
Chairman, members of the committee. Appreciate your taking the
time to hear this in such a timely manner. Briefly, a little
background that I'm sure most of you are aware of. Alaska has
become one of the most forward thinking trust states. Our 1997
trust act, which many of you here in this room participated in
drafting, has placed us right beside Delaware as one of the
premiere states to invest in trusts. In light of that fact, those
laws need to be carefully scrutinized and revised as changes are
made, primarily through court interpretations of laws. What
happened is that the original trust act was drafted with sort of a
broad brush and the basic idea was to create a trust industry here
in the state of Alaska. The sideboards put on it were that it had
to be an Alaska trust company, and accordingly Alaskan jobs would
be created. Those corporations obviously pay corporate income tax
and property tax. But there were a few areas that the specifics
fell by the way side.
Last year, your body passed on to us SB 162, which the house
concurred with and was signed by the governor, which addressed the
first deficiency that was discovered. That deficiency essentially
was that there was a tax consequence when you wanted to give a
special power of appointment if you wanted to use a special power
of appointment to create a successive special power of appointment.
It sounds like rather technical language and it is but it's an
important distinction that needed to be made in our statutes
because the consequences would have been rather dramatic had our
court interpreted our law. It created a problem known as the
Delaware Tax Trap, and if you notice in your bill packet, there is
an article on that Delaware Tax Trap. But essentially it's this
notion that if you use that special power of appointment to create
a successive power of appointment there will be immediate tax
consequence in the form of an estate tax from the federal level.
Clearly that was not the intent of this legislature in passing
that, and it was an oversight in very technical language. So SB
162 was supported unanimously in both bodies and by the governor
and passed on.
The bill that is before you today, HB 34, is an effort to correct
another technical problem that was discovered in the bill. And I
think one of the best ways that I could explain it would be, it's
the statute as it reads, describes 'fruit.' If a court were to go
in and discuss apples versus oranges, and specifics about oranges,
there may be a problem. In other words, again, too big of a brush
stroke was used in creating this particular section and a
distinction wasn't fettered out between presently exercisable
general powers and those of testamentary general powers. As you
well know, all three of you, presently exercisable general powers
are those that can be exercised within your life time - inter-
vivous - and testamentary general powers are only those powers that
can be exercised upon your death through your will. The bill that
I have before you doesn't change any policy; the policy has already
been adopted and enacted by the legislature. What it does is it
cleans up the language to effectuate the purpose that's already
been passed. And in doing that, it looks at the distinction that
courts have made between presently exercisable general powers and
testamentary general powers. And what it does, is it says that
they vest at different points in time based on how the court
interprets them. A presently exercisable general power is viewed
as complete ownership and therefore it's viewed as vesting at the
time of its creation. So the first part of the bill makes it clear
that, yes it will vest, and it will vest at the time of the
creation of the new appointment power and that's according to
everything that we have learned from the way the courts interpret
it, but we're going to assign it a period of 1,000 years. So for
all intensive purposes it will continue on into perpetuity. For
all intensive purposes it abolishes the rule against perpetuities,
a 1,000 years is a long time. But it creates a very specific
vesting point. Contrasted with section (c), which states that if
it's a testamentary power of appointment or a successive non-
general power that it will vest, but it will go back to, it's a
relation-back concept, it will go back to the creation of the
original document, and the vesting period will then be a 1,000
years from that point. It sounds really complicated but I think
you all understand it very well and certainly had an opportunity to
look at SB 162 last year, which got at the original problem, the
original Delaware Tax Trap problem, and this is just a further
effort to ensure that we don't create tax consequences for the
trusts that have been created to avoid them. And with that, I'll
take any questions.
Number 487
SENATOR COWDERY: On the top of page 3, where it starts 'at least
30 years' and there's some other things - on page 2, can you
explain that [indisc.] that's [indisc.] the purpose of that.
REPRESENTATIVE MCGUIRE: Senator Cowdery, top of page three, line
1.
SENATOR COWDERY: Yeah.
REPRESENTATIVE MCGUIRE: What that is actually, if you look at it,
is clean-up language. The second section, all of section three, is
legitimately clean-up language and it was designed to make it more
specific. The language of, 'after every power,' we added 'of
alienation' even though it could have been implied that it was a
power of alienation. And then at the point where we say 'after the
death of the individual alive at the time of creation,' that's
language that is actually pulled from - if you look on page 2,
starting at line 13, that language in section 1 is already there so
it's an effort to put that language back into section 4 so that it
is very clear. All of section 3 has absolutely no new effect
whatsoever, it's merely a matter of cleaning it up, language wise,
so that it is very clear about what power you're talking about and
at what point that power will vest.
SENATOR COWDERY: Thank you.
Number 481
SENATOR THERRIAULT: The retroactive provision, April 22 - was that
the effective date of SB 162?
REPRESENTATIVE MCGUIRE: Yes it is. And to clarify, obviously the
purpose of that is so that those folks who created trusts won't
have unpleasant consequences if something is ruled on so it will
date back to our last year's bill.
Number 612
CHAIRMAN TAYLOR: Representative McGuire I really appreciate you
bringing this before us because I started this process with this
committee about five years ago, I think. And Representative Joe
Ryan worked with us out of the house to bring several of these
pieces over also. I think we're talking of at least six or seven
bills. And our purpose, as you stated, was to make Alaska an
attractive state or venue for the residents of a trust. And the
overall purpose was not only to provide people with that benefit,
but to enhance those businesses within the state that would be
guiding and directing those trusts. My frustration has been that
we have seen a small amount of investment occurring within the
state with a couple of banks that have worked hard at recruiting,
if you will, people to transfer their trusts into this state so
those reserve funds and other things - investment portfolios would
be available and we would have some additional jobs out of it.
Tragically, this administration has failed to enforce those
provisions that are really left up to the Department of Commerce,
Banking and Securities, to enforce, and that as far as I know,
nobody has been going in through this administration and actually
auditing some of these financial institutions in the state that are
really very actively involved in this process. But all of the work
is being done through their main branch, which is located in Iowa
or Kansas or some darn place. And we've seen hundreds of millions
of dollars flowing into those banks down there and bootstrapping it
off of banks up here as if they had a head office up here. They
don't. I guess my only inquiry was going to be to you, have you or
your staff had a chance to really look into that?
REPRESENTATIVE MCGUIRE: Chairman Taylor, actually it's not a
problem that has been brought to my attention prior to this
committee hearing. But it's certainly something that we could look
into. Obviously I'm aware of the true success stories that Alaska
USA, credit union trust companies, and the Key banks and those, so
I wasn't aware of that problem but its certainly something I can
look into.
CHAIRMAN TAYLOR: Well there were those who wished to take
advantage of the law and - but to do it without locating a primary
or a head office in this state, and without any enforcement from
banking and securities, under the provisions that we passed, it
means that if you've got a large multi-national kind of bank
sitting down south someplace, where you write it up as if it's
going through Alaska, and then you can do all these transactions,
but the money ends up lodged in your bank down there and there are
no jobs or benefits that come up here out of it.
I'm aware of the success stories and I'm very pleased that we were
able to do this for the various banking institutions. In fact, I
was visited while on the Kenai one time by one of the top bankers
on the World Bank that happened to be there fishing, and looked me
up because he wanted to say thanks on behalf of people he
represented because of the hundreds of millions of dollars they had
been able to place in trust within the state of Alaska. He was
primarily working through the National Bank of Alaska at that time.
But no, there have been some real successes here. What I foresee
is, probably a constant dribble of, for the next several years,
clean-up bills like this because every time the tax courts or
someone else makes a decision interpreting one of these provisions,
then we end up with whatever the name of the case is coming down
the pike, and then we have to rewrite our legislation around to
close off a loop hole that some other court has now found. And
that's, I think, part of the reason we're here today, is because of
that. But if you'd help me a little bit in looking into some of
that stuff, I'd sure appreciate it. It would be nice to get a
response back from banking and securities and also the attorney
generals office on the enforcements provisions and what they're
doing about them.
I have no other questions, just wanted to thank you for bringing
the bill forward
Number 898
SENATOR THERRIAULT: Mr. Chairman, just before we take any final
vote on this, I did just want to disclose that my wife is an
attorney. She does work in the area of tax avoidance and trust
creation. I have no idea whether she has created any trust within
this window that's impacted by the retroactive section of the bill
or not but I did just want to give a general disclosure on that.
CHAIRMAN TAYLOR: We do have two witnesses to testify on
teleconference. The first I turn to is Dana Olson. Ms. Olson is
in Mat-Su. Can you hear me Miss Olson.
MS. DANA OLSON: Yea I can. I wanted to come before you today and
become more educated, and to get a better understanding how your
bill on rules against perpetuities addresses property and property
interests that have been either futuristic interests or have been
considered futuristic interests. I've listened with interest so
far but you really haven't mentioned how the definition of
alienation would effectively relate the property and property
interests. As you know, property cannot be made on a case-by-case
basis; it has to have some definition in order to be property.
Otherwise, you are simply eroding our 14th amendment right, the
right to own property. I have a couple of interesting situations
concerning futuristic interests. And there again I lack the
understanding of your bill on how this will affect me. One of them
- alienation - there is no definition that I could find in your
bill on property interests. And it can be by affect, I give you a
scenario of a 1984 Chase Agricultural Homestead Lottery whereby
effect I'm being, my property is being alienated by environmental
court precedent. This court precedent now is being considered at
the SIP level of which the petitioner wants to eliminate the effect
of the court precedent and have a SIP revision. I have a problem
with that, being held to a standard of which the petitioner
established, and then not providing me a means to be treated
equally under the law. So I would have to ask that this committee
consider the effect and perhaps maybe even insert that the Chase
Agricultural Homestead Lottery, if the petitioner who sets the
standard, is going to want the standard changed that we have some
remedy.
I have a problem with the date, the retroactive date, because there
again, it appears to be in the state's best interest to change the
standard and there is no rationalization why I should be exempt.
I want to bring up also RS 2477 because it's alienation on
property. At some point it was a futuristic interest. There
again, there is no definition on alienation but your date would
seem to suggest that you will be creating different classifications
of RS 247 claims because it will be used as a defense claim to any
asserted retroactive back-to-back date that their property interest
alienation. It will give them an unequal opportunity to assert a
defense claim, which I would not be able to. So I guess that
basically - I would like to see a definition of what alienation is
as it relates to property interest. Also alienation of, have to
have a definition, whereas it's in a trust, a trust basically is
interpreted by its wordage. Where property is asserted by
statutory or code or what not, it will need clarification there.
Thank you.
Number 1175
CHAIRMAN TAYLOR: Dana, I got to tell you you've thoroughly
confused me and the panel because nothing within this bill, that
I'm aware of, would impact in any way the subjects that you were
discussing. This is a bill that would impact private trusts
created by individuals who own property, whether it is real
property or personal property and the decision that these people
have made about how they want their property conveyed or held and
what the tax aspects may be. That's what this bill effects and, if
anything, this bill would give you greater rights with the
disposition or alienation of your property, either real or personal
than what you would have had under state law prior to the time we
made these changes. In fact the changes that are suggested here
are for the primary purpose of protecting individuals like you from
paying additional federal taxes to the federal government because
of the way in which they've placed their property for the
protection of their wife or their children or their grandchildren
and placed it in trust. That's the purpose of the legislation.
There's nothing within this legislation that would in any way that
I can contemplate, at least, impact either RS 2477, which is a
federal right granted as against property in this state prior to
the time it was even conveyed at statehood. Nor is there anything
that I'm aware of that would effect in a negative way your rights
as an individual to sell, convey, or in anyway alienate your own
personal property whether it's real property, dirt or personal
property, cash or bonds or jewelry. You've confused me thoroughly,
Dana, and if I'm missing something please correct me cause I'm not
quite sure how your subjects relate to this bill.
MS. DANA OLSON: Okay, I'd be glad to. First of all I think
there's a - I have followed your past bill in the last legislative
session and it was stated that, it is the rule against perpetuities
is a complex thing, and again I'm not a lawyer.
CHAIRMAN TAYLOR: Let me stop you right there for a minute. The
rule against perpetuities was to prevent a person like you, if you
owned a piece of ground out there in the Mat-Su Valley, you could
not under the rule against perpetuities convey your property to
your heirs forever to be used only for a farm in the Mat-Su Valley.
That was because they ended up with people holding farmland in the
middle of downtown London and the city needed the land to expand
into, but nobody could get access to the land and they had to raise
cows and pigs in the middle of downtown London. And so the old
English common law said, wait a minute why isn't this property
coming back into the market place, why isn't it turning over, why
isn't somebody either able to buy it or sell it. Well, they
couldn't buy it or sell it because the original deed said it had to
be used for that purpose forever. So they came up with a rule and
they said you can't establish a piece of property and lock it up
forever like that, it violates the rule against perpetuities
because it was locked up in perpetuity. So that's where the rule
come from, and what we're saying here is that we are going to allow
a trust to extend beyond the rule against perpetuities, which is by
the way is measured by - many different jurisdictions measure it
different ways but normally it's like 80, 90 years plus [indisc.].
In other words, if you had a great grandchild alive 90 years from
now the trust wouldn't terminate till that last great grandchild
died. So if you do it right you can probably extend a trust even
on land for a period of maybe a hundred and fifty years. It
otherwise would then have to come back into the main stream of
market place and so on. So that's what it's all about, it's really
the rule against perpetuities - limits people on what they can do.
These amendments provide you and other people with a greater
opportunity to tie up your assets for a longer period of time.
That's a policy call of course but that's what the legislature
decided to do here.
MS. OLSON: I think you're misunderstanding. First of all my
property doesn't relate to a trust, but it's being alienated from
conveyance.
CHAIRMAN TAYLOR: No, no, what's happened to your property if
you're impacted by an RS 2477, is that your concern?
MS. OLSON: No, I have two issues. One is my 1984 Chase
Agricultural Homestead Lottery, which is a conveyance under state
law.
CHAIRMAN TAYLOR: Right.
MS. OLSON: All right, and basically the conveyance, although March
2000 the entry permit does not need a best interest finding. I'm
being impacted by a court decision which is a form of alienation of
which a standard has been set in the state of which now a state
agency wants to override, by regulation and SIP approval, this
precedent case which effected my homestead.
CHAIRMAN TAYLOR: I think I understand the problems you've got and
there are two of them probably. There's the case that now has
changed your relationship or your authority over the property and
that's the court case one. And you may have an RS 2477 concern
too.
MS. OLSON: Yes I do and the RS 247, as you having been working
with the statute of limitations, I have asserted my claims,
therefore in relation to that, but the RS 247 issue is that I will
be put into a different classification by your retroactive
provision in your bill. I will be treated unequally, basically,
than anyone of the future or present or the future. I object to
that. RS 247 under your theory of law of the states was as
transference at statehood, then we're all treated equally. I would
think that if you were writing this bill saying that there cannot
be any alienation on property, what you would be virtually saying
is that the RS 247 could not be alienating the property as any that
were retroactively back to April 21st of last year. So those would
be in a different category than the ones asserted in 1998.
CHAIRMAN TAYLOR: Let me assure you that language has absolutely no
effect or impact on RS 2477 rights. None.
MS. OLSON: Well it does in a sense because mine was prescribed
already by federal survey. The state is trying to assert by
regulation the width and also in your prior bill, on the rule
against perpetuities, when something is prescribed under a
transference theory it doesn't enlarge, so when you take five to
seven feet, and by regulation, want to insert that it is either 100
or 500 feet that is a property taking. So this bill has some
relevance to RS 247, what you were working on last year has some
relevance and the alienation aspect does have relevance.
CHAIRMAN TAYLOR: Okay, I guess it does. I haven't seen it yet.
All we're talking about is your ability as a property owner to
convey to your loved ones or people that you want to have in a
trust. All we're talking about is your ability to sell, convey,
alienate your land over to them in a trust.
MS. OLSON: The rule in itself has a greater capacity than what
maybe your bill is talking about. It infers that it is. I read
that it infers, it's talking about alienation and that it doesn't
specifically exclude futuristic interests or interests that were
futuristic at some point. Maybe if you had put a provision in your
law excluding that, than I would feel more comfortable about
asserting that it does not apply, but because there is no such
language in the bill, I will have to assert that it does. One
never presumes anything, it's simply factual. The rule against
perpetuities as it effects alienation, it can effect conveyance
currently as well as to my heirs. I have to do something pursuant
to a court case of which now another state agency wants to override
the court precedent. Therefore, I will be under alienation, and
the present petitioner, the oil industry, will not have to be under
the alienation. And I object to that. There is no rational basis
why I should be held to a standard of which they should not be held
to a standard.
CHAIRMAN TAYLOR: Dana, honest to goodness I think you are talking
about a totally different subject than what we've got before us. I
know you think there's some relationship but I can't for the life
of me understand how it would do that to you.
MS. OLSON: Today in Alaska the agricultural homestead lottery
basically today do not convey agricultural rights, usage -
agricultural use, the right to use land. They actually convey a
different type of property interest. So basically my family may be
the only one. So you may not understand--
CHAIRMAN TAYLOR: I understand fully what has happened on
agricultural rights and I've been fighting to try and reassert
those rights along with Senator Green down here for some time. But
believe me, Dana, that is a totally different question. That's the
question of how much land do you own, how big is it, is it
encumbered in some way by an easement, are you allowed to use it
for some purpose other than farming, must you be constricted to
farming only. Those are the kind of questions you're talking
about.
MS. OLSON: No, I'm talking about alienation of conveyance.
CHAIRMAN TAYLOR: I understand that, but you're confusing the words
alienation of conveyance. Alienation is a right that you would
have under law to sell your property.
MS. OLSON: My property is under the commissioner of natural
resources.
CHAIRMAN TAYLOR: I understand that fully and it takes his consent
because of the restrictions put on your land by the state when you
first purchased that land and I know there's been court cases on
it, Dana. But that has absolutely nothing to do with this, in
fact, this bill, whatever rights you have in that land would allow
you to do more with your land and more with your property than you
are currently allowed to do under Alaskan law or federal law today.
We're trying to expand your rights as an individual. We're not
trying to constrict them.
MS. OLSON: The way I understand the bill, it does not allow for
alienation.
CHAIRMAN TAYLOR: That's not true.
MS. OLSON: Okay.
CHAIRMAN TAYLOR: Honestly, that's not true. We're trying to
expand the ability that you and your husband or family would have
over this property to convey it in a way that would be more
beneficial to you and your family in which you would pay fewer
taxes. That's what we're trying to do.
MS. OLSON: I understand the concept of what your using it for but
as far as - if you're going to define in Alaska statutes the rule
against perpetuities, which is basically based on common law of
which there is court precedent forever. Okay. And you're going to
then use it only for trust, then there is confusion on whether or
not we're under common law or whether we're under state law. You
know what I'm saying and you're using the rule against
perpetuities, which has a legal basis and a legal understanding to
be narrowly interpreted for a specific purpose and you're specific
purpose is, like you stated on it, relating to trusts. But what
I'm trying to say is your bill does not exclude nor state that it
does not apply to futuristic interests. Had it done that, then I
would feel comfortable about asserting what your stating, but it
doesn't say that.
CHAIRMAN TAYLOR: Okay, well thanks much.
MS. OLSON: Thank you very much.
Number 1818
MR. RUDY VETTER: Good afternoon everyone.
CHAIRMAN TAYLOR: How you been, Rudy? It's been a long time since
we had a chance to have a cup of coffee together.
MR. VETTER: Yeah, well we'll have to do that one of these days.
CHAIRMAN TAYLOR: I'll look forward to that. Would you like to
testify on this bill 34?
MR. VETTER: Well just a little bit. I was going to ask a question
- does this apply, in the case that you are a member of a
corporation, does that apply so that you, this bill takes care of
your interest in a corporation that you can pass that on or is this
only for personal property?
CHAIRMAN TAYLOR: No, I believe this involves all forms of
property, Rudy. As a consequence, it would allow you, I believe,
to place your corporate stock, say if you could either do it now
because you are alive, that's inter-vivous, you could also do it in
a will, which would be a testamentary transfer into a trust. Once
you had transferred that property, your corporate stock, into that
trust, could the trustee then move forward and handle or do things
with that stock, yes they could. And in fact, this would allow
them to do so, literally in perpetuity. It would be a valid
transfer for up to a 1,000 years under the interpretation of this
bill, which you would not be allowed to do, but for.
MR. VETTER: Okay, I think I understand that and I think you've
explained quite well.
CHAIRMAN TAYLOR: Well actually I overstated just then. You can do
that today but without this language your estate might very well or
your trustee at some time in the future who converted this stock to
some other stock, would then be faced with an estate tax and you
would have to or your trustee at the time would have to pay a
significant amount of estate tax for making this change in
ownership, this alienation or change or ownership. So believe me,
I don't specialize in this field and this is very complex stuff
about trust law, but I'm advised this will allow people like
yourself to place valuable stock, valuable patents, other
instruments of value into a trust and then it will allow for
greater flexibly on the part of your trustees with less liability
in the form of potential taxes. That's the purpose of the
legislation, Rudy.
MR. VETTER: Okay, I think I understand but I also have one
concern. In some of these contracts that I have made in [indisc.]
the word perpetuities was considered void and illegal so I hope the
legal department has researched the word perpetuity - whether you
can do that. I think you are doing it with the 1,000 year
situation in here and that should take care of it. It looks good
quite good to me.
I don't know why Dana is so, I believe that was her name, why she's
so concerned. There's one thing we must remember about all
legislatures, another legislature can come on, in another term, and
change the law again. So you really find it pretty hard - I don't
believe any legislature could put anything in perpetuity and make
any law last forever. Because the succeeding legislatures, it may
be 30 years, but they could change it too. Thank you.
CHAIRMAN TAYLOR: Well, I certainly agree with that, Rudy. It's
just great to hear your voice and hear you're doing well up there.
Yeah, we certainly can change things.
Let me give you a little quick background on why we're here on this
stuff. People in the United States, frustrated over our tax laws,
took their money out of the United States and placed it in Bahamian
banks. The numbers I've been told may be as high as $3 trillion of
U.S. money, is currently sitting in either European or offshore
banks. It's sitting out there because those people didn't want to
pay estate taxes on it when it got conveyed upon their death from
their estate over to their children or to their wife or whoever.
So what they did, they ran offshore with this stuff. Now, the IRS
would like to have some of that money back in the United States and
we're hearing about a lot of negotiations going on, but no federal
laws have been changed yet. And what the federal law changed,
they're looking for - is that those people could bring their money
back into the United States and would not have to pay an additional
tax on it for their lives but upon their death then they would have
to go through a normal trust and estate planning process. In
anticipation of that, we in Alaska have structured our tax laws so
as to provide them the same kinds of opportunities they were
receiving in the Bahamian banks, basically to extend trusts beyond
the rule against perpetuities and to provide for some additional
flexibility. In the process of doing that, we've changed Alaska's
laws to the place where they are very attractive now as a place to
put your investments, which would help people throughout the state.
What this bill's all about, Rudy, is just some clean-up language
because of various federal tax cases that have come up on these
subjects to try and define in advance, before people end up going
to court, the correct way of doing it so they don't get caught
unawares and lose money back to Uncle Sam for tax purposes. That's
really all we're doing here. But could this be changed in the
future, you're absolutely right, it could be changed this year,
next year, or ten years from now. Would it have the effect of
wiping out the rule against perpetuities with these trusts, yes I
think it would but only in a prospective basis, more than likely.
And it would establish a new rule if they wanted to put a new rule
against perpetuities on it. So yes you're correct, Rudy, anything
we do here can be changed and let's thank god for that because we
never know if we're doing it right and somebody may need to change
it on us. But thank you for coming out Rudy. Any other comments?
MR. VETTER: Yeah, just a little bit on the stock market. The way
it is, there's a lot of paper flying everywhere. And I think some
of it's got to go into the stratosphere. We've got to watch it
pretty closely. The only true medium of exchange for exchanging
debts between governments is gold and gold is way down right now
and we gold miners still hang on, saying we think it's going to go
up. And I think this stock market is, regardless of what all the
experts say, I can remember in 1929, I was just a boy, but the
experts said, oh it's going to be fine, it'll be all right, just
invest for the future. [indisc.] hang on for the future. That's
all I've got to say.
CHAIRMAN TAYLOR: Rudy, thank you for coming out. I really
appreciate the great things you have done for this state and the
work you have done in the Fairbanks area on behalf of your friends
and colleagues in the mining industry. I'm going to be up there
this weekend, old friend; I'll be there on Saturday. If I get a
chance I'll drop down to the coffee shop and we can have a cup of
coffee together.
MR. VETTER: Give me a call at 457-5509. There's a lot of things I
want to talk to you about.
CHAIRMAN TAYLOR: Well Rudy, I would enjoy that too. Okay, I'll
give you a shout. Thank you.
Number 2147
REPRESENTATIVE MCGUIRE: Chairman Taylor, could I just add a couple
comments. I just want to make a couple comments.
This is Representative McGuire the prime sponsor of the bill and I
just want to make a couple general comments to both of you who took
the time to testify. I think the most important thing to remember
is that this is a legislative policy that has been made. This is a
construct, but that, in any event, if you are ever going to
consider creating a trust for yourself, putting specific corporate
property into a trust, any of those types of things, you absolutely
should seek out a trust and estates lawyer who has specialties in
the area who can explain the law, explain whether this is the right
vehicle for you or not. It may or may not be. There may be
another way to protect your property interests. I just wanted to
echo what Senator Taylor was saying, which is that this really
pertains to private trusts law, a very specific area of the law.
When you start getting into RS 2477's and things like that, that
really is a separate area.
And then the final thing I wanted to say was that you're right
Rudy, there is a rule against perpetuity in the legislature and
things can't just continue on and on into perpetuity. So at some
point there were, lets say as state income tax, god forbid,
implemented this area of the law may be revisited.
CHAIRMAN TAYLOR: Yeah, that's true. Okay, well thanks everyone.
It wasn't my intent to move the bill today. Members had asked to
have a little more time to understand it. You have a little more
homework to do around here, I think. And I think it's because of
the unique nature of this type of legislation, so I'm going to let
it cook for maybe another week or so and we'll bring it back up and
move it out.
SENATOR THERRIAULT: Is that the extent of people to testify?
CHAIRMAN TAYLOR: That's the only ones I have.
SENATOR THERRIAULT: Is Steve Greer on line?
MR. STEVEN DEVRIES: My name is Steve DeVries, I'm here but I'm
not---, if Representative McGuire was taking about Steve Greer?
REPRESENTATIVE MCGUIRE: Yeah.
MR. DEVRIES: No, my name is Steve DeVries, I'm here.
CHAIRMAN TAYLOR: Okay, if you have any comments we'd be happy to
take them.
MR. DEVRIES: I'm assistant attorney general, monitoring the status
of this bill.
CHAIRMAN TAYLOR: Well maybe you can tell me, did I tell Dana the
right things?
MR. DEVRIES: Senator Taylor, I think as far as a rendition against
the rules of perpetuities you may want to consider writing a
textbook. However, I can't promise you I'd buy a copy of it.
CHAIRMAN TAYLOR: Well thank you for that. I'll give you a quick
story; I think it's a fascinating one. Bob Ziegler's father, a
wonderful gentleman named A.H. Ziegler, both of them are long gone,
god rest their souls, but A.H. Ziegler had read law for two years
or three in a lawyers office and felt that he was ready to take the
bar exam. So he took the bar exam in Nome, Alaska, and the bar
exam in those days was an oral exam conducted in an attorney's
office. And so the bar would authorize an attorney in your town to
examine you and you would go to his office where he and others
would ask you questions. So A.H. Ziegler showed up in the
attorney's office in Nome and there were two other attorneys'
there. And the very first question asked of him was, please define
for me the rule in Shelly's case. And A. H. in telling me this
story, allowed as how he went on for about 20 minutes, and I was
shocked to hear that because I didn't think I could go on for five
minutes on the rule in Shelly's case, but he had gone on for about
20 minutes explaining the complexities of that rule and was then
interrupted by one of the attorney's examining him. It was the
host attorney who'd asked the question initially and this other
attorney interrupted and he said, Mr. Ziegler you're wrong, the
rule in Shelly's case is such and such. He said which initiated
quite a discussion among the three examining attorneys as to which
one was right about the rule in Shelly's case and he said that
argument between the three examiners continued on for about another
25 minutes. He said at which point one of the guest attorneys
looked at the host attorney and said, my god George we've been in
your office for over 45 minutes now and you still haven't offered
us a drink. At this point, George, the host attorney, turned to
his safe, opened it up, took out a bottle of scotch, and apparently
that ended the exam and A. H. was told he had passed. So sometimes
these arcane rules of law do have beneficial effects. But enough
of my reminiscing here.
Thank you so much for standing by, is there anyone else on the
teleconference that has a question or would like to give testimony
on this bill? Anybody here? Okay, we're going to hold the bill
till next Wednesday, it will be on the calendar and it will be my
intent to move the bill out at that time. Thank you all for
attending. We're adjourned.
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