Legislature(1993 - 1994)
03/10/1994 08:00 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 307 - UNIFORM PROBATE CODE CHAIRMAN VEZEY opened discussion on SSHB 307. Number 067 TIM BENINTENDI, AIDE FOR REPRESENTATIVE CARL MOSES, gave the sponsor statement for SSHB 307. The sponsor summary reads as follows: "SSHB 307 would provide a comprehensive upgrade of Alaska's probate code by adopting revisions to AS 13.11 and AS 13.31, as recommended by the National Conference of Commissioners on Uniform State Law (NCCUSL). Revisions to AS 13.11 involve Intestacy, Wills, and Donative Transfers. There would also be changes to AS 13.06, General Provisions, and to AS 13.16, Probate of Wills and Administration. "Changes to AS 13.11 are primarily aimed at enhanced spousal and family protection, reduced risk of technical invalidation of wills, and greater harmony of the rules of presumed intention for property transfers at death. "Changes to AS 13.31 center on the clarification of the law of joint tenancy and tenancy in common for deposit accounts held by multiple parties. It also includes Transfer-On- Death provisions for investment security accounts. "The Sponsor Substitute added the changes to AS 13.31, the Nonprobate Transfers. It also deletes some definitions as found in the NCCUSL language, which are duplicative or unnecessary. Other modifications convert NCCUSL language into Alaska's drafting style. This version also places the registry for international wills in the Department of Commerce and Economic Development..." MR. BENINTENDI stated the registry for international wills may eventually be placed in the court system, but without the court system completing its review of SSHB 307, they were not prepared to recommend this change. The sponsor summary continued: "HB 307 is supported by the Attorney General, the Alaska Uniform Law Commission, and the American Association of Retired Persons. The Alaska Court System is currently reviewing its provisions. It carries zero fiscal notes from DCED, LAW, and the Court System." Number 126 CHAIRMAN VEZEY commented SSHB 307 dealt with a very complicated subject. ART PETERSON was asked to be the next individual to testify. CHAIRMAN VEZEY stated he had received a letter from MR. PETERSON earlier in the week. Number 166 ART PETERSON, DILLON & FINDLEY ATTORNEY, ALASKA UNIFORM LAW COMMISSIONER, testified in favor of SSHB 307. He stated SSHB 307 is an attempt by the NCCUSL, in conjunction with the Joint Editorial Board for the Uniform Probate Code, to update discrepancies they have found in Uniform Law. He noted families are not the same as they were when the original version of Uniform Law was being drafted. Families now have multiple parents due to divorces and remarriages, and mixed children within them. He stated questions arise when a decedent, in his will says, "I give to my children all of my property," because it is hard to define which children, out of which marriage, are to be included in the distribution. MR. PETERSON stated if a person dies without a will, currently the Intestacy provisions divide the assets of the deceased. SSHB 307 will rearrange some of the traditional provisions on Intestacy. The surviving spouse will get a larger share under the amendments in SSHB 307. In second marriage situations, the second marriage may occur much later in life; therefore, SSHB 307 recognizes the number of years of marriage will go to the percentage that the survivor will receive. Descendants and parents of the decedent will have distribution changes. MR. PETERSON mentioned the Alaska delegation to the National Conference supports SSHB 307. He commented SSHB 307 really only has one provision which has a state impact which is the registry for international wills. This would be a state repository for performing international wills registration. He stated SSHB 307 regulates the distribution of property among private individuals. MR. PETERSON said the letter the committee received from the Association of Retired Persons to REPRESENTATIVE MOSES, December 1, 1993, highlights SSHB 307 well. MR. PETERSON explained there were two basic parts to SSHB 307, Article II, Intestacy and Wills, and Article IV, Nonprobate Transfers. Alaska already has some provisions which regard the concept of "pay on death," whereby a decedent's bank account can automatically be transferred into a survivor's name. Current law, however, relates to multiple party accounts, and the amendment in SSHB 307 would allow the law to address single party accounts. The transfer provisions for securities will be expanded to cover an individual's certain range of assets, whereby upon death, a person's stocks would avoid probate and be transferred directly to the property of a designated person. (REPRESENTATIVE SANDERS left the meeting at 8:15 a.m.) Number 353 CHAIRMAN VEZEY noticed the section of SSHB 307 regarding Alaska Native Corporation stock and pointed out it did not sound like a national issue. Number 360 MR. PETERSON responded the Alaska Native Corporation stock section was an "Alaska wrinkle." When he worked with House Judiciary in the early 1970s, they amended the probate code to include that provision because the Alaska Native Claims Settlement Act (ANCSA) had just passed in 1971. He noted certain provisions of state law had to be enacted to implement the federal law. Therefore, the special situation of ANCSA stock had to be recognized in SSHB 307. MR. PETERSON pointed out the provision was on page 9, lines 18-20, which states, "The intested share of the surviving spouse in settlement common stock, or other inalienable stock, in a corporation organized under ANCSA..." He noted there have been attempts to tailor SSHB 307 to fit both the Alaska format in drafting style, as well as a "wrinkle" such as the ANCSA provision. Number 380 CHAIRMAN VEZEY asked MR. PETERSON to explain what SSHB 307 would do with Native corporation stock. (REPRESENTATIVE OLBERG left the meeting at 8:20 a.m.) Number 385 MR. PETERSON replied when there is no will, the surviving spouse will get all of the decedents assets if there are no children. If there are children, the surviving spouse would get half of the assets. Number 390 CHAIRMAN VEZEY questioned the phrase "surviving issue." Number 392 MR. PETERSON responded SSHB 307 helps clarify and improve terminology such as "child, children, issue, descendants, etc..." "Surviving issue" would normally be the descendant children. Number 401 CHAIRMAN VEZEY commented the revision of Uniform Probate Code has been worked on for 20 or more years and he observed society has not necessarily changed. He noted the divorce rate in Alaska today is less than that of 25 years ago. He asked if MR. PETERSON had been referring to societal changes which had been occurring from the mid-1970s to the current date. Number 416 MR. PETERSON answered he was referring to the complete continuum. He said he based his testimony on the comments produced by the drafters when SSHB 307 came out. The drafters were addressing the changes which occurred during the 20 year original promulgation and enactment of the original version of the Uniform Probate Code. The drafters pointed out along with the substantial divorce rate, there is a substantial remarriage rate. Remarriages produce children with multiple sets of parents and SSHB 307 deals with the questions that arise because of these changes in the family. (REPRESENTATIVE OLBERG returned to the meeting at 8:24 a.m.) Number 442 CHAIRMAN VEZEY stated the biggest change he was aware of in the last 30 years was the number of illegitimate births. MR. PETERSON agreed, assuming CHAIRMAN VEZEY meant the parties are out of wedlock and may or may not be living together. He stated SSHB 307 tries to simplify both the intested, and will situation, so there is an emphasis on executing the intent of the person with the will. Secondly, for those without a will, SSHB 307 tries to determine what the decedent would most want to have happen to their property. He noted SSHB 307 does not specifically point out illegitimate children, but it does define "children" as including adopted children, and in a single parent situation a "child" is still defined as a child. Number 469 REPRESENTATIVE G. DAVIS inquired if there had been any attempts to ensure that residents of a state do have a will in trying to reduce the amount of probate problems that arise. MR. PETERSON did not know of a state that has made the making of wills an official state policy by some state agency. He knew Bar Associations around the country are encouraging people to get wills and make their intent clear. (REPRESENTATIVE SANDERS returned to the meeting at 8:27 a.m.) Number 483 CHAIRMAN VEZEY asked what changes there are in circumstances that would trigger a person's estate going to the state. Number 487 MR. PETERSON did not believe there were significant changes by SSHB 307 in the circumstances. An estate goes the state when there is no will and there is no identifiable descendant or antecedent who could inherit from the decedent. Number 495 REPRESENTATIVE JERRY SANDERS referred to AS 13.12.108 on page 11, which states,"after born heirs, an individual in gestation at a particular time is treated as living." He inquired as to the definition of "a particular time." Number 500 MR. PETERSON assumed "particular time" means the time of death of the decedent. In the case of the woman who dies while a child is in gestation, typically the child would also die. He stated the example of a father who dies and his will speaks before his child is born. AS 13.12.108 attempts to address this problem if the individual lives 120 hours more after the birth. Number 511 REPRESENTATIVE SANDERS clarified the newborn child could not be disinherited. Number 515 MR. PETERSON said the child would be treated as a living child if it survived 120 hours after birth. He noted the 120 hours were similar to the provisions in the Simultaneous Death Act, which Alaska now has and is slightly modified by SSHB 307. Number 521 REPRESENTATIVE BETTYE DAVIS asked if there had not been any changes to the Uniform Probate Code since it was enacted 20 years ago. Number 525 MR. PETERSON answered there had been no comprehensive revisions. Number 526 REPRESENTATIVE B. DAVIS questioned if there was a mandate for the changes, or were the Uniform Probate Code changes reviewed and the states were left to decide if they should implement them. Number 530 MR. PETERSON answered there was not a federal mandate for the Uniform Probate Code changes, although there is an international convention in effect which the United States has not signed onto yet. He stated if states were to adopt the international wills provisions in SSHB 307, it would encourage the federal government sign on. Number 535 REPRESENTATIVE B. DAVIS clarified the changes started on a state by state basis. Number 536 MR. PETERSON affirmed REPRESENTATIVE B. DAVIS. Number 542 MR. PETERSON pointed out in Article II there are some random amendments, but basically the Uniform Code in the 1972 version. He stated the Joint Editorial Board for the Uniform Probate Code is comprised of several component organizations that bring the topics together. The Uniform Laws Conference then creates a drafting committee who then works for a minimum of two, or more years to reach the final stages. The drafting committee then brings the draft to the floor of the National Uniform Laws Conference where it is debated by the entire group for two separate years. Number 557 CHAIRMAN VEZEY introduced JOHN GEORGE as the next individual to testify. Number 561 JOHN GEORGE, AMERICAN COUNCIL OF LIFE INSURANCE, stated his concerns about SSHB 307. He stated life insurance agencies are very concerned about SSHB 307 because the beneficiary to a life insurance policy is designated by the person buying the policy, or there are contingent beneficiaries, assuming the named beneficiary is deceased. He noted SSHB 307 might change the beneficiary of the life insurance policy to someone other than designated. Insurance would be pulled into probate, whereas before life insurance policies have been excluded from probate. Number 583 CHAIRMAN VEZEY clarified the American Council of Life Insurance is asking for more time to review SSHB 307. Number 587 MR. GEORGE felt MR. PETERSON and other researchers should review SSHB 307 with them. He noted SSHB 307 had a number of committee referrals and there would probably be time to go over SSHB 307 and deal with any problems they may find in another committee. Number 596 REPRESENTATIVE B. DAVIS asked MR. PETERSON to speak to MR. GEORGE's concern. CHAIRMAN VEZEY added he had received communication from five attorneys in the Fairbanks area who practice probate and have asked for time to review SSHB 307. They stated the Probate Committee for the Alaska Bar Association had not reviewed SSHB 307. Number 604 MR. PETERSON responded the Alaska Bar Association, Probate Section, has had the opportunity to study and review SSHB 307. The Bar Association puts out a monthly newsletter listing the different sections of the bar, and in that schedule for 1992-1993, they were taking up Article II revisions in several meetings. He noted the Bar Association has had SSHB 307 in their formal study system for nearly two years. He said the chair of the probate section advised him that some members expressed serious concerns to him (the chair). He wrote back, October 4, 1993, and asked them for their concerns so they could get them straightened out. In the same letter he gave an example of a concern and offered alternative approaches to solve the problem. MR. PETERSON said he still has not received a response to his October 4, 1994, letter and he doubted the seriousness of their concerns. MR. PETERSON referred to Former Attorney General, Charlie Cole, who supported SSHB 307. He stated in reference to the section on spousal share, Mr. Cole supported a more extreme version which gave the spouse even more. MR. PETERSON would like to know the specific comments by the Fairbanks attorneys because he felt they had had time to study SSHB 307. MR. PETERSON did not quite understand MR. GEORGE'S statement, therefore, he felt it would be good to meet with his organization and discuss their concerns. Number 647 CHAIRMAN VEZEY commented the letters received by the attorneys would become public record and MR. PETERSON would have access to them. Due to the complex nature of SSHB 307, CHAIRMAN VEZEY decided to hold SSHB 307 in committee and it would be rescheduled at a later date.