Legislature(2023 - 2024)BELTZ 105 (TSBldg)
04/25/2024 03:30 PM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB81 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 81 | TELECONFERENCED | |
HB 81-VEHICLES/BOATS: TRANSFER ON DEATH TITLE
3:31:10 PM
CHAIR KAWASAKI announced the consideration of HOUSE BILL NO. 81,
"An Act relating to the transfer of a title on the death of the
owner; and providing for an effective date."
3:31:54 PM
REPRESENTATIVE GEORGE RAUSCHER, District 29, Alaska State
Legislature, Juneau, Alaska, sponsor of HB 81, read from the
following sponsor statement:
[Original punctuation provided.]
House Bill 81
Sponsor Statement
"An act relating to the transfer of a title on the
death of the owner; and providing for an effective
date."
The process of probate in the state of Alaska can take
anywhere from six months to several years, and can
cost family members and beneficiaries thousands,
potentially tens of thousands of dollars in legal and
filing fees. While the State Legislature has already
taken great strides to reduce the costs of probate,
there is still much room for improvement.
3:33:11 PM
REPRESENTATIVE RAUSCHER continued to read from the sponsor
statement for HB 81:
[Original punctuation provided.]
HB 81 continues in spirit with the Uniform Real
Property Transfer on Death Act (URPTDA), which
unanimously passed both the House and Senate in 2014.
URPTDA created the Transfer on Death (TOD) deed, which
allows for nonprobate transfers of real property. TOD
deeds allow Alaskans to select a beneficiary who will
receive the property at their passing and removes that
property from the process of probate.
In 2016, legislation similar to HB 81 was introduced
but the legislation failed to pass that session. HB81
is nearly identical, although it expands the concept
to apply both to vehicles and boats that are issued
titles through the state.
HB 81 continues the ongoing effort to reduce the costs
of probate for Alaskans and creates a streamlined
service through the DMV through which they can
designate beneficiaries for both cars and boats
through a simple form. The TOD titles will be
available for all boats and vehicles for which the DMV
provides titles, which also includes some mobile
manufactured homes under AS 45.29.102(66). The program
will be self-sustaining through fees.
At no cost to the state, HB 81 will allow countless
Alaskans to pass down boats, vehicles, and some
manufactured homes to beneficiaries with more ease,
and will help simplify and streamline the potentially
complicated, costly, and painful process of probate
following the death of a loved one.
3:34:37 PM
RYAN MCKEE, Staff, Representative George Rauscher, Alaska State
Legislature, Juneau, Alaska, presented the sectional analysis
for HB 81:
[Original punctuation provided.]
House Bill 81
Vehicles/Boats: Transfer on Death Title
Sectional Analysis
Section 1:
Adds a new section under AS 05.25 that allows owners
of boats, for which the Department of Administration
(DoA) issues titles, to obtain a transfer on death
(TOD) title.
Section 2:
Amends AS 13.33.101(a) to add a transfer of a boat or
vehicle by a TOD title to the existing list of
acceptable nonprobate transferable property.
Section 3:
Creates a provision under AS 13.33 for a transfer on
death (TOD) title for boats and vehicles. Creates and
defines the mechanism through the Division of Motor
Vehicles (DMV), by which individuals will obtain,
revoke, or change their transfer on death title and
defines the parameters of the transfer on death title.
(a)-(c) Obtaining a TOD Title
• Creates a provision under AS 13.33 for a transfer
on death title for vehicles and boats for which
DoA issues titles.
• This includes some manufactured homes for
which the DMV issues titles under AS
45.29.102(66). These homes are without a
permanent foundation and transportable in
one or more sections. Requires that the
transfer of title to the designated
beneficiary occurs when the sole owner or
last surviving joint owner of the vehicle
dies.
• Requires that owners of the boats or vehicles
file a form through the DMV and pay associated
fees to apply for a TOD title.
• Limits the TOD titles to two beneficiaries.
3:36:29 PM
MR. MCKEE continued his presentation of the sectional analysis
for HB 81:
[Original punctuation provided.]
(d) TOD titles effective without notice or
consideration
• Provides that TOD titles will not require notice
or acceptance by the designated beneficiary.
• Provides that TOD titles will not be subject to
consideration, the process by which there is an
exchange or "quid pro quo" required from the
recipient of the assets.
• Language taken from TOD deed statute under
AS 13.48.060.
(e) TOD titles are nontestamentary
• States that TOD titles are nontestamentary,
meaning that the associated vehicles do not need
to be provided for in the decedents will.
(f)-(g) Revocation or Change to TOD titles
• Provides that the owner may revoke or change the
designated beneficiary on the TOD at any time
without the beneficiary's consent.
• Explains the process by which owners may revoke
or change a TOD title.
• The owner can either assign and deliver the
certificate of title for the vehicle to
another person, thereby revoking the TOD
title, or;
• file with the DMV to reissue the title
without a designated beneficiary or with a
different designated beneficiary.
(h) Designated beneficiaries right to disclaim
interest
• Allows designated beneficiaries to refuse the
boat or vehicle designated to them in a TOD
title.
• Language taken from TOD deed statute under
AS 13.48.100.
(i) TOD titles subject to decedent's creditors,
contracts, etc.
3:38:10 PM
MR. MCKEE continued his presentation of the sectional analysis
for HB 81:
[Original punctuation provided.]
• Subjects the TOD title to creditor's claims
against the owner's estate, as well as to other
interests, contracts, liens, encumbrances,
assignments, and other interests.
• These interests remain attached to the boat or
vehicle after it is transferred to the designated
beneficiary.
(j-m) Enforcing liability upon TOD titles
• Imposes the same procedures for enforcing
liability upon TOD titles that is applied to TOD
deeds under AS 13.48.110 and AS 13.48.088.
• Provides that the estate may enforce liability
against boats or vehicles with TOD titles if the
owner's estate does not cover an allowed claim.
• States that if there are multiple vehicles and/or
boats, and a liability exists in the deceased's
estate, the liability will be apportioned to each
asset in proportion to its net value. Requires
that a proceeding to enforce a liability must
begin within 12 months of the owner's passing and
can only begin once proper notification to
beneficiaries has occurred.
• Stipulates that TOD titles do not affect rights
of ownership before the owner's death, and do not
affect rights of the designated beneficiary or
creditors of the owner(s).
• TOD titles do not give legal or equitable
preference to the designated beneficiary.
• TOD titles do not affect designated
beneficiaries' eligibility for state public
assistance.
(n-p) Uniform standard of survivorship, requirements
to receive TOD title
• Requires that the designated beneficiary survive
the previous owner by 120 hours.
• Requires that the designated beneficiary submit
proof of the owner's death and an application and
associated fees to the DMV. If there are two
beneficiaries listed on the TOD title, they
become joint owners.
3:40:08 PM
MR. MCKEE continued his presentation of the sectional analysis
for HB 81:
[Original punctuation provided.]
(q) TOD titles may not be changed by other instruments
• Provides that TOD titles may only be changed by
the process outlined in section 3 and not by a
will or any other instrument.
(r)
Gives the DoA authority to develop regulations to
implement the TOD titles, establish necessary
forms and fees, etc.
(s) Definitions
Section 4:
Amends AS 13.48.110(c) to add a person acting on
behalf of the surviving spouse of the decedent to the
list of people who may demand to enforce liability
against the decedents' property.
Section 5:
Adds a new section to AS 28.10.275, relating to
vehicle titles, to clearly state that owners of
vehicles for which the DMV issues titles may obtain a
TOD title.
Section 6:
Gives the DoA authority to develop necessary
regulations.
Section 7:
Applies an immediate effective date to section 5 of
the bill to allow the department to develop
regulations.
Section 8:
Applies an effective date of July 1, 2024 to the
legislation except for sections 5 and 7.
3:41:30 PM
SENATOR CLAMAN said that this is essentially the same structure
as an Individual Retirement Account (IRA) or a bank account. He
briefly explained how this process works for banking. He
commented that banks or IRA companies provide a certain level of
confidence, because the signed documents are held by these
companies, rather than by individuals. He asked if there is
anticipation for the signed documents associated with titles to
be on file with the DMV or whether they would be held by
individuals in their homes.
MR. MCKEE deferred this question to invited testifiers.
3:43:19 PM
SENATOR CLAMAN explained that he is concerned about potential
document fraud. He said he supports HB 81 but would like to
ensure identity protection. He suggested that DMV holding the
documents could be a solution.
3:44:32 PM
REPRESENTATIVE RAUSCHER offered his understanding that ensuring
that the correct name is on the title prior to the owner's death
would address this issue.
3:44:58 PM
SENATOR CLAMAN stated that this does not address his concern and
added that, once the owner is deceased, there is a risk of
forgery. This is not an issue with the banks, because action
must be taken through the bank in order to change one's
beneficiary. He reiterated his concern that someone could forge
the documents if they are not held in a safe location and
suggested that measures could be put in place to ensure that
this does not occur.
3:46:14 PM
REPRESENTATIVE RAUSCHER replied that he could provide further
information to the committee.
SENATOR CLAMAN expressed willingness to consider an amendment
that would address this issue.
3:46:49 PM
CHAIR KAWASAKI asked why HB 81 is limited to boats and motor
vehicles.
3:47:06 PM
MR. MCKEE replied that aircraft are regulated by the Federal
Aviation Administration (FAA) and are thus not eligible for
state regulation. He added that boats that are over 24 feet must
be dealt with by the coast guard.
3:47:39 PM
CHAIR KAWASAKI asked to whom - or to which entity - TOD is
transferred to.
3:48:15 PM
MR. MCKEE replied that TOD would be transferred to a family
member. However, any associated debts owed on the title would
follow. He explained that the recipient is not required to
accept the gift. With respect to the question of title forgery,
he said that TOD is a new license that is issued through the
DMV. He explained that this would require the owners of the boat
or vehicle to fill out new forms and pay fees at the DMV. If
someone were to simply write their name on the title and claim
it as their own, it would not be on file with the DMV office
(and fees would not have been paid), and therefore would not be
valid.
3:49:47 PM
SENATOR CLAMAN opined that unless the title on file with the DMV
states who the title is transferring to, the issue remains. The
owner could potentially take a blank document home, to be filled
in at a later date. He surmised that being required to provide
the name of the individual receiving the title transfer when the
paperwork is filled out (and fees are paid) at the DMV would be
a better safeguard. He said the banks have rules and
regulations, which provide higher confidence that a transfer on
death title would not be manipulated.
3:51:29 PM
MR. MCKEE said he would seek clarification. He added that if
this is not already addressed by HB 51, he would work on an
amendment to create specific guidelines.
3:51:43 PM
SENATOR CLAMAN commented that there may be other alternatives.
He reiterated that part of the transfer on death title process
could require that the title recipient be on file with the DMV
in order to mitigate the risk.
3:52:31 PM
SENATOR BJORKMAN joined the meeting.
3:52:37 PM
CHAIR KAWASAKI announced invited testimony for HB 81.
3:52:46 PM
LINDA HULBERT, representing self, Fairbanks, Alaska, testified
in support of HB 81. She said she has worked in the life
insurance industry for the past 35 years. She stated she
consults with people who need to plan for retirement and the
transfer of assets. These assets often include boats and
motorhomes, which muddy up the probate process. She suggested
that not having to go through probate would mitigate these
issues. She said that the transfer on death title process is
simple and inexpensive. She opined that this process makes
sense. She explained the practical benefits this change would
provide her clients, including financial savings that results
from avoiding probate. She stated that this method of asset
transfer is efficient - and the recipient is simple to change.
3:55:05 PM
MS. HULBERT said that many Alaskans desire a straightforward
estate transfer process that does not create extra work for
their loved ones. She reiterated that avoiding probate is one
way to achieve this goal. She emphasized that HB 81 creates an
easier, more positive process for Alaskans. She suggested that
the TOD should be kept on file somewhere - and others should be
informed of the TOD. She stated that proper planning is key -
and this requires the ability to create a TOD for a boat or
motorhome. She emphasized the benefit of TOD as a part of the
beneficiary designation process. She stated that many people
would benefit from the simplification that HB 81 would provide.
3:57:26 PM
CHAIR KAWASAKI asked when it is necessary to go through probate.
3:57:42 PM
MS. HULBERT replied that "probate" means that someone is
changing a title - and it is a question of value. She
acknowledged that someone with a legal background would need to
be consulted to explain this in detail and shared her
understanding that probate applies to undesignated estate assets
that are over $60,000. She briefly described the probate
process. She noted that this is an expensive process and shared
a story to illustrate this.
4:01:44 PM
CHAIR KAWASAKI asked how simple the process is to transfer a
minivan.
4:02:17 PM
SENATOR CLAMAN explained that if there is a will and no other
measures to avoid probate were taken, the transfer of the title
would be addressed in probate court. He noted that the intent of
a transfer on death title is to avoid this, along with other
mechanisms in the estate plan that are designed to avoid
probate. He stated that the goal is to transfer assets (e.g. an
IRA or savings account) based on instructions. He commented that
not everyone has a will and briefly explained the process that
occurs when the deceased did not have a will. He explained that
the transfer on death title would avoid both the instance of a
will that results in probate and the process that occurs when
the deceased did not have a will.
4:04:30 PM
MARIAM HALL, Marketing and Communications Coordinator, Peak
Trust Company, Anchorage, Alaska, testified in support of HB 81.
She said that she also represents Alaska Trust and Estate
Professionals (ATEP). She stated that HB 81 has the potential to
reduce probate costs in Alaska and added that, with appropriate
planning, would potentially reduce the administrative burden
within the court system.
4:06:00 PM
CHAIR KAWASAKI opened public testimony on HB 81; finding none,
he closed public testimony.
4:07:02 PM
REPRESENTATIVE RAUSCHER expressed gratitude for the hearing on
HB 81. He stated that there have been several requests for this
legislation, which has taken several years to draft. He
explained that during this time, the scope of HB 81 was expanded
to include cars and boats.
4:07:33 PM
CHAIR KAWASAKI held HB 81 in committee.
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