03/02/2009 01:00 PM House JUDICIARY

HB 101 - EXEMPTIONS: LIFE INSURANCE; ANNUITIES                                                                                
                                                                                                                                
2:49:54 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced that the  final order of business would be                                                               
HOUSE BILL  NO. 101,  "An Act  exempting the  full value  of life                                                               
insurance and  annuity contracts  from levy to  satisfy unsecured                                                               
debt,  and amending  the description  of earnings,  income, cash,                                                               
and  other  assets  relating to  garnishment  of  life  insurance                                                               
proceeds payable upon the death of an insured."                                                                                 
                                                                                                                                
2:50:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAHLSTROM  moved to  adopt the  proposed committee                                                               
substitute  (CS)   for  HB  101,  Version   26-LS0176\E,  Bailey,                                                               
2/19/09, as the work draft.   There being no objection, Version E                                                               
was before the committee.                                                                                                       
                                                                                                                                
2:50:50 PM                                                                                                                    
                                                                                                                                
AMANDA  MORTENSEN, Intern,  Representative  John Coghill,  Alaska                                                               
State Legislature,  explained that HB  101 would exempt  the full                                                               
value of  life insurance and annuity  [contracts] from attachment                                                               
by  creditors,  thereby  protecting Alaskan  families  and  their                                                               
ability to plan  for their future.  And although  HB 101 will not                                                               
prevent  creditors from  garnishing  a person's  other assets  in                                                               
order to satisfy  a debt, it would protect the  death benefits of                                                               
a  spouse  or dependant  of  the  debtor  if  he/she is  not  yet                                                               
deceased.    Retirement  plans   are  currently  protected  under                                                               
federal  law,  and  HB  101 would  offer  similar  protection  to                                                               
someone who had used an annuity  contract in lieu of a retirement                                                               
plan.    With the  uncertainty  of  the social  security  system,                                                               
Alaskan families need  to be able to legitimately  plan for their                                                               
future.                                                                                                                         
                                                                                                                                
MS.  MORTENSEN -  noting that  Title 9  pertains to  the Code  of                                                               
Civil  Procedure,  that  Chapter  09.38 pertains  to  the  Alaska                                                               
Exemptions  Act,  that  AS 09.38.025  pertains  to  exemption  of                                                               
unmatured  life  insurance and  annuity  contracts,  and that  AS                                                               
09.38.030 pertains to  exemption of earnings and  liquid assets -                                                               
explained that  Section 1 of  the bill would remove  the existing                                                               
$10,000 exemption  cap on life  insurance and  annuity contracts,                                                               
and that  Section 2 would remove  the words "or payable"  from AS                                                               
09.38.030(e)(4)  in  order  to   clarify  a  potential  ambiguity                                                               
regarding garnishing  a death  benefit on  an individual  who has                                                               
not yet passed away.                                                                                                            
                                                                                                                                
MS.  MORTENSEN relayed  that  as  of May  2007,  10 other  states                                                               
exempt life insurance and annuity  contracts - 100 percent - from                                                               
creditors.   In  conclusion, she  noted  that Version  E also  no                                                               
longer  contains the  word "unsecured"  in the  title; this  will                                                               
allow  the bill  to  apply  to debts  other  than just  unsecured                                                               
debts.                                                                                                                          
                                                                                                                                
2:53:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HOLMES expressed interest in hearing more about                                                                  
the concept of including all debts as opposed to just unsecured                                                                 
debts.                                                                                                                          
                                                                                                                                
REPRESENTATIVE COGHILL, speaking as the  sponsor of HB 101, noted                                                               
that that issue  arose in the bill's last  committee of referral,                                                               
and offered his belief that HB  101 is clear with regard to which                                                               
products will be exempt from garnishment.                                                                                       
                                                                                                                                
[HB 101, Version E, was held over.]