01/29/2010 01:00 PM House JUDICIARY

          HB 144 - UNIFORM PROBATE CODE; TRUSTS, WILLS                                                                      
                                                                                                                                
2:25:23 PM                                                                                                                    
                                                                                                                                
VICE CHAIR DAHLSTROM  announced that the final  order of business                                                               
would be  HOUSE BILL  NO. 144,  "An Act  relating to  the Uniform                                                               
Probate  Code,  including  wills, trusts,  nonprobate  transfers,                                                               
augmented  estates, personal  representatives, and  trustees; and                                                               
amending Rules 3 and 8, Alaska  Rules of Civil Procedure, Rule 1,                                                               
Alaska Rules  of Probate Procedure,  and Rule 37.5,  Alaska Rules                                                               
of Administration."                                                                                                             
                                                                                                                                
2:25:57 PM                                                                                                                    
                                                                                                                                
JANE W.  PIERSON, Staff, Representative Jay  Ramras, Alaska State                                                               
Legislature, explained  on behalf of the  sponsor, Representative                                                               
Ramras, that  HB 144  would update  Alaska's trust  laws, thereby                                                               
enabling  Alaska  to  maintain  its  frontrunner  position  as  a                                                               
premier location  for trusts and estate  planning.  Specifically,                                                               
HB 144  would add provisions allowing  the settlor of a  trust to                                                               
designate a  representative who can bind  an incapacitated person                                                               
in  future proceedings  related  to trust  administration -  this                                                               
would  streamline the  process  and would  not  always require  a                                                               
guardian ad  litem (GAL); and  would establish that  an augmented                                                               
estate does  not include property  transferred to  an irrevocable                                                               
trust if the settlor is  a discretionary beneficiary of the trust                                                               
and the  transfer was made more  than 30 days before  marriage or                                                               
with the  consent of the decedent's  spouse - this is  similar to                                                               
Delaware law.   An augmented  estate, she explained,  consists of                                                               
property owned by  both the decedent and his/her  spouse, and its                                                               
value is  only calculated  if the  surviving spouse  declines the                                                               
amount left by will and instead  claims a share of the decedent's                                                               
estate; the [allowable] amount [varies  from state to state], and                                                               
in Alaska that  would be one-third of the combined  estate and is                                                               
called the widow's election.                                                                                                    
                                                                                                                                
MS. PIERSON explained  that HB 144 would also  create a procedure                                                               
for the  establishment of will  and trust validity  before death;                                                               
essentially,  a person  would be  able to  probate a  will before                                                               
death and  have it validated.   This would address  situations in                                                               
which questions arise regarding  the person's capacity to execute                                                               
a will or  trust, or regarding whether the  document was executed                                                               
as a result of undue influence,  duress, fraud, or mistake.  This                                                               
new procedure would allow issues  to be brought before the courts                                                               
while  the testator  or settlor  is still  alive and  evidence is                                                               
fresh.  Three  other states have a similar  provision, she noted.                                                               
The bill would also provide for  venue of a probate proceeding if                                                               
the  decedent was  not domiciled  in Alaska  but had  significant                                                               
assets located within the state.                                                                                                
                                                                                                                                
2:29:33 PM                                                                                                                    
                                                                                                                                
BETHANN  B.  CHAPMAN, Attorney  at  Law,  Faulkner Banfield,  PC,                                                               
after mentioning that she has  practiced trust and estate law for                                                               
the past 22 years and that she  is a member of the informal group                                                               
of  trust  and  estate  attorneys   that  has  been  recommending                                                               
specific  changes to  Alaska's trust  and estate  laws, said  she                                                               
supports HB  144.   In response  to a  question, she  offered her                                                               
understanding that  the bill itself  doesn't need to  be altered,                                                               
adding her belief  that the provisions regarding  what she called                                                               
the  "pre-death probate  procedure"  in particular  will be  very                                                               
effective in reducing litigation among families.                                                                                
                                                                                                                                
REPRESENTATIVE  GRUENBERG referred  to proposed  AS 13.06.120(3),                                                               
which says in  part that a person representing  another person is                                                               
not  liable  for  acts  or  omissions made  in  good  faith,  and                                                               
questioned the use of this standard.                                                                                            
                                                                                                                                
MS.  CHAPMAN  indicated  that  that   [provision]  would  not  be                                                               
applicable to  trust and estate  attorneys, but rather  to anyone                                                               
[else] who is representing another  beneficiary in a trust matter                                                               
- for example,  one sibling representing another sibling.   If an                                                               
attorney  were representing  a  beneficiary,  the attorney  would                                                               
still be held to his/her  professional standards.  The good faith                                                               
standard in  proposed AS 13.06.120(3)  is the same  standard used                                                               
with regard to a trustee's actions,  as is noted in the [American                                                               
Law  Institute's  (ALI's)  Restatement  (Third)  of  the  Law  of                                                             
Trusts].                                                                                                                      
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked whether  the good  faith standard                                                               
in  proposed AS  13.06.120(3)  would  apply to  a  bank or  other                                                               
professional institution that represents a beneficiary.                                                                         
                                                                                                                                
MS. CHAPMAN replied, "It's the  nature of the representation that                                                               
we're focusing  on, not  necessarily who  the individual  is, and                                                               
even if  it were a  bank, when we  have banks serve  as trustees,                                                               
there is  always a threshold  of good faith."   In response  to a                                                               
further  question,   she  offered  her  understanding   that  the                                                               
standard  of  good faith  is  defined  in  case  law and  in  the                                                               
Restatement (Third) of  the Law of Trusts, but not  yet in Alaska                                                             
statute.   It means that one  is acting in the  best interests of                                                               
the person whom one is representing.                                                                                            
                                                                                                                                
2:36:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to proposed AS  13.12.545(4) -                                                               
part of the  provisions regarding validating a  will before death                                                               
- and noted that  it says in part that in order for  a will to be                                                               
declared valid,  the petition  must be  signed by  two individual                                                               
witnesses.   He  questioned whether  language stating  that those                                                               
two individuals cannot be beneficiaries  ought to be added to the                                                               
bill.                                                                                                                           
                                                                                                                                
MS. CHAPMAN  pointed out that  under current law, witnesses  to a                                                               
will do not  need to be disinterested parties and  can in fact be                                                               
beneficiaries; this  is the generally-recognized  rule throughout                                                               
the  country.    In  response   to  questions,  she  assured  the                                                               
committee that the standard of  good faith stipulated in proposed                                                               
AS  13.06.120(3) won't  absolve someone  who acts  negligently or                                                               
unreasonably, that  there is no  chance that this  standard could                                                               
be misinterpreted, and that the  court has already issued rulings                                                               
on [this standard] and no one considered it to be a loophole.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG  said he supports HB  144, and indicated                                                               
that he  would be  researching the issues  raised further  as the                                                               
bill  continues  through  the  process.    Again,  of  particular                                                               
interest to  him, he relayed, is  to ensure that the  standard of                                                               
good  faith  stipulated  in proposed  AS  13.06.120(3)  would  be                                                               
interpreted  as  Ms. Chapman  asserts  it  would be,  since  that                                                               
standard would be at the heart of certain types of litigation.                                                                  
                                                                                                                                
MS. CHAPMAN,  in response to  a question, indicated that  a typed                                                               
will would need  to be signed by two witnesses  but wouldn't need                                                               
to be  notarized, and that  in contrast, a handwritten  will need                                                               
only be signed by the person.                                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG,  referring to the  provisions regarding                                                               
validating a  will before death,  offered an example in  which an                                                               
absent heir later sues the estate,  claiming that the will is not                                                               
binding  on  him/her  because  he/she  didn't  have  a  right  to                                                               
participate in the validation proceeding  due to his/her absence.                                                               
He asked what the result would be in such a situation.                                                                          
                                                                                                                                
MS. CHAPMAN explained  that notice must be provided  to all heirs                                                               
of  the individual  whose will  is being  probated before  death;                                                               
therefore,  if any  heirs  are not  provided  adequate notice  in                                                               
accordance with the  statutes, then the will won't  be binding on                                                               
those heirs.   In response  to a further question,  she explained                                                               
that  those who  are not  named  in a  will have  no standing  to                                                               
challenge the will absent producing "a contract to make a will."                                                                
                                                                                                                                
REPRESENTATIVE   GRUENBERG    -   referring   to    proposed   AS                                                               
13.12.540(a), which,  in the provisions pertaining  to validating                                                               
a will before  death, addresses venue -  questioned whether dual,                                                               
and  perhaps dueling,  probates would  be required  in situations                                                               
involving testators domiciled outside of Alaska.                                                                                
                                                                                                                                
MS.  CHAPMAN  relayed that  multiple  probates  already occur  in                                                               
situations involving testators with  property in multiple states.                                                               
Generally,  one court  will take  the original  jurisdiction, and                                                               
[the  bill]  allows  -  consistent   with  what  she  termed  the                                                               
"conflicts of laws" provisions -  for Alaska to take the original                                                               
jurisdiction if that's the wish of  the decedent.  In response to                                                               
a question,  she confirmed that  there is  already a body  of law                                                               
addressing such situations.                                                                                                     
                                                                                                                                
2:47:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO moved  to report  HB 144  out of  committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
note.   There being no  objection, HB  144 was reported  from the                                                               
House Judiciary Standing Committee.