Legislature(2001 - 2002)
01/29/2002 01:35 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 157-TRUST COMPANIES & FIDUCIARIES
CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee
meeting to order at 1:35 p.m. and announced HB 157 to be up for
consideration.
REPRESENTATIVE LISA MURKOWSKI, sponsor of HB 157, said that it
was an update to the Trust Act that was first instituted in 1949
and had seen very little change. She worked with the Division of
Banking and Securities for the past three years on this bill and
it passed out of the House with considerable support.
She explained that the Division of Banking and Securities in
conjunction with many other states took model acts from the
Conference of State Bank Supervisors and drafted the bill before
them. Basically the legislation defines who can conduct a trust
business in the state. The statutes presently don't give any
guidance as to that. They also define the exemptions to the act,
so that a person who has been appointed as a trustee of their
family trust or a law firm or lawyer who does an occasional trust
is not subject to HB 157. In addition, the bill details the
powers of the trust companies, the requirements for chartering
and provisions such as minimum statutory capital requirements,
confidential handling of the customer information, disclosure of
conflicts of interest and provide for mergers, sales, voluntary
and involuntary liquidations. "It is to provide the parameters
and the guidelines for those trust companies that would choose to
do business in the State of Alaska."
REPRESENTATIVE MURKOWSKI said that legislation passed before she
came to the legislature makes a concerted effort to attract trust
business to the state and this provides guidelines for the
companies who decide to come. She said the Mr. Terry Lutz from
the Division of Banking and Securities had been working on it all
along and could answer questions.
CHAIRMAN STEVENS asked how many entities now manage trusts in
Alaska.
MR. LUTZ, Division of Banking, Securities and Corporations,
answered that there are two state chartered trust companies at
the time and there were other entities out there that advertised
in the yellow pages as doing trusts. Right now it doesn't say who
must charter; it says, "five or more people may charter a trust
company". It doesn't' require anybody to have a charter. This
bill would require that and gives specific guidelines on how to
go about doing that.
SENATOR TORGESRON asked if it was correct that it takes only one
person to start a trust.
MR. LUTZ answered yes.
SENATOR TORGERSON asked him to explain why it would help to go
from four or five to one person to start a trust (page 8, line
3).
MR. LUTZ replied that they used model acts from a dozen or more
states and used areas that seemed consistent and would work in
Alaska. He said further down the bill language talks about the
operation and running of the trust company. It needs five or more
directors, but just one person can form the company.
CHAIRMAN STEVENS said one person can form the company, but to
incorporate, they have to go on to laws of incorporation in the
next section.
MR. LUTZ said that was correct.
CHAIRMAN STEVENS asked how many companies in the yellow pages
were soliciting that they could manage a trust under the criteria
that this bill puts forward.
MR. LUTZ replied that he would be contacting those entities if
the act is passed and let them know the requirements.
SENATOR TORGERSON asked if someone gives a down payment to an
attorney or a realtor and they say it's going into their trust
account, is that what this bill deals with.
MR. LUTZ replied no. There is a specific exemption for that type
of trust business.
CHAIRMAN TORGERSON asked if retirement funds would come under
this.
MR. LUTZ replied that it would depend on how things were
structured.
SENATOR TORGERSON asked if the state was making any money off of
this.
MR. LUTZ replied no.
1:45
SENATOR AUSTERMAN asked if he contacted these other people for
input.
MR. LUTZ replied that they contacted the Bar Association, the
Alaska Bankers Association and the organizations that had a lot
of contacts to get as many people involved as they could. They
didn't go into the yellow pages.
MR. DAVE SHAFTEL, Estate Planning Attorney, said he is a member
of an informal group of attorneys who have been working with the
legislature on various estate planning and state trust matters
over the last five years. Their emphasis has not been on forming
trust companies or trust company businesses, but rather on how
this bill would affect residents of Alaska who form trusts and
name family members or family friends or charitable organizations
as trustees of those trusts.
We are comfortable now that there are appropriate
exemptions for those areas I have just mentioned where
we find that someone should be allowed to be a trustee
of a family trust and not have to go through all of the
regulatory and capitalization requirements to form a
trust company…."
He said there was one little area that still needed work.
SENATOR TORGERSON asked if the effective dates were correct.
CHAIRMAN STEVENS responded that they were going to do a
conceptual amendment for those.
SENATOR TORGERSON asked if the bill was just repealing all of the
old trust language. "There's not a secret repealer in here on
something else…"
REPRESENTATIVE MURKOWSKI replied that she wouldn't do something
like that to him. She wanted to address Senator Austerman's
question about who had been contacted. She has worked within the
divisions within the Bar Association, the Trust Association
informal working group, the two trust companies that are
organized right now and any banks that have trust operations.
"There has been a relatively broad working group that has gotten
together over the past several years. We have made a good effort
to alert people and to get their input on this although we have
not gone through the yellow pages."
SENATOR AUSTERMAN moved a conceptual amendment that would change
page 64, line 8, and page 65, lines 12 and 14 to 2003 from 2002.
There were no objections and it was so ordered.
SENATOR TORGERSON moved to pass SCSHB 157(L&C) am from committee
with individual recommendations. There were no objections and it
was so ordered.
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