04/28/1998 01:35 PM Senate L&C

            SB 354 - WILLS, TRUSTS, & OTHER TRANSFERS                          
                                                                               
CHAIRMAN LEMAN brought SB 354, sponsored by the Senate Judiciary               
Committee,  before the committee as the next order of business.                
                                                                               
MEL KROGSENG, staff to Senator Robin Taylor, explained the                     
legislation puts finishing touches on the Alaska Trust Act passed              
in 1997 by taking common law and codifying it into statute.  In                
writing the trust document, people who write trusts for Alaska,                
will be able to include references to the statutes as opposed to               
having to individually list all the provisions in the trust                    
document.                                                                      
                                                                               
SB 354 makes a number of important improvements to Alaska's estate             
and trust laws.  Section 1-8, 18, and 19 of the bill change Alaska             
law to permit a person who is domiciled outside of Alaska to select            
Alaska as the jurisdiction for the probate of their estate.  This              
provision should bring significant business to the state.                      
                                                                               
Sections 9 and 10 of the bill allow a person to limit the liability            
of a trustee in their trust when more than one trustee is serving.             
The person could provide that only the trustee who exercises a                 
power will be held liable for his  actions and that the other                  
trustee who did not participate in the exercise of the power would             
not be held liable.  This provision will encourage trustees in                 
Alaska to work with other trustees of the same trust.                          
                                                                               
Portions of the Uniform Trusts Act draft 1997) which clarify many              
issues involving the administration of trusts in Alaska are                    
included in Section 11 of the bill.                                            
                                                                               
Section 12 protects an Alaska trustee who in good faith defends an             
Alaska trust from the claims of a creditor who seeks to set the                
trust aside.  If the trustee acts in good faith, then the trustee              
gets a first lien on all trust assets for payment of its fees,                 
costs and attorneys' fees.  Delaware has adopted a similar                     
provision to protects its trustees.                                            
                                                                               
Section 13 allows a trustee who has the power to invade the corpus             
of a trust to appoint the assets of the trust to another trust for             
the beneficiaries to postpone estate and similar taxes.  This                  
provision would allow a trustee to move a trust to Alaska and to               
appoint the assets to an Alaska trust.                                         
                                                                               
Section 14 clarifies that a trust created in another state or                  
country can be moved to Alaska even though the trust was settled               
before the Alaska Trust Act was passed last year.                              
                                                                               
Alaska does not have a statutory provision that sets out the powers            
of a trustee.  Sections of the Uniform Trustee's Powers Act (draft             
1994-1997) are enacted in Section 16 of the bill.  These statutory             
powers would supplement the powers set forth in a trust agreement.             
                                                                               
A number of miscellaneous provisions are included elsewhere in the             
bill.  Section 15 allows a person to include a penalty clause in               
their trust.  Section 17 clarifies the accounting of bond premiums             
and discounts.  Section 20 amends AS 34.40.110(d) to be consistent             
with the Uniform Fraudulent Transfers Act.  Section 21 precludes an            
action by creditors of the grantor of the trust against those who              
assist in the creation of the trust.                                           
                                                                               
Concluding her overview on the legislation, MS. KROGSENG said this             
bill will improve estate and trust laws and will make Alaska's laws            
more favorable to its residents.  In addition, the bill will make              
Alaska's laws more attractive to people outside of Alaska who are              
considering Alaska for the administration of their estates and                 
trusts.                                                                        
                                                                               
Number 525                                                                     
                                                                               
SENATOR LEMAN asked Ms. Krogseng if she was aware of any opposition            
to the legislation.  MS. KROGSENG replied that she was not, and                
that correspondence in support of the legislation as been received             
from attorneys in Anchorage who work trusts.  The attorneys have               
said it will make it easier for them in working with trusts and                
setting them up.                                                               
                                                                               
STEVEN NOEY said one of the important things in the legislation is             
the ability to take a trust that has been created prior to Alaska              
Trust Act and have it moved to Alaska.  The U.S. Treasury estimates            
that there are about a trillion dollars offshore in trusts, and a              
lot of them have gone offshore due to the fact that Alaska didn't              
have a self-settling trust where it was an asset protection trust.             
SB 354 is a housekeeping measure to make sure that there is no                 
conflict if people do want to switch and move the trust to Alaska.             
                                                                               
                                                                               
DOUGLAS BLATTMACHER, President and CEO of the Alaska Trust Company             
(ATC), testifying via teleconference from Anchorage, stated ATC                
strongly supports SB 354. ATC thinks it will complement the Alaska             
Trust Act passed last year and will encourage more people to set up            
trusts, as well as generate additional job opportunities and                   
business opportunities.                                                        
                                                                               
RICH HOMPESCH, a Fairbanks attorney and a member of the Alaska                 
Probate Rules Committee, said he helped draft portions of SB 354,              
and he agrees with the previous testimony on the bill.  He thinks              
the bill will help Alaska remain competitive in the trust industry             
in the United States.                                                          
                                                                               
There being no further testimony or discussion on SB 354, CHAIRMAN             
LEMAN requested a motion to move the bill out of committee.                    
                                                                               
Number 487                                                                     
                                                                               
SENATOR MACKIE moved SB 354 be passed out of committee with                    
individual recommendations.  Hearing no objection, it was so                   
ordered.