Legislature(2007 - 2008)BELTZ 211
04/27/2007 01:30 PM Senate JUDICIARY
Audio | Topic |
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Start | |
Confirmation Hearing, Board of Governors of the Alaska Bar Association | |
Confirmation Hearing, Violent Crimes Compensation Board | |
Confirmation Hearing, Commission of Judicial Conduct | |
Confirmation Hearing, Alaska Judicial Council | |
SB141 | |
SB38 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | TELECONFERENCED | ||
+ | SB 38 | TELECONFERENCED | |
+ | TELECONFERENCED | ||
= | SB 141 | ||
SB 141-LIMITED LIABILITY COMPANIES 2:16:35 PM CHAIR FRENCH announced the consideration of SB 141. SENATOR McGUIRE, sponsor of SB 141, said the bill is by request of industry. It will clarify that an organization providing professional services can organize its business using a limited liability company (LLC). This will end speculation on the authority of the use of an LLC for professional services. She noted that a group of professionals meet to talk about recent court decisions and statutes that have passed in other states for the purpose of keeping Alaska current. The legislature decides whether the policies that are suggested comport with what it thinks is appropriate, she added. 2:19:40 PM SENATOR McGUIRE explained that SB 141 is designed to keep the state's trust and estate planning laws up to date and competitive, thereby continuing to bring more business and revenue into the state. To date Alaska has received over $2 million in direct revenue through increased life insurance premium taxes, corporate taxes, and LLC and LP filings. Alaska competes in these markets with at least 7 other states that have enacted similar legislation, she said. Also, SB 141 will delete AS 10.50.150(d) to allow a founder of an Alaskan LLC to be a co- manager without having the assets of the company included in the founder's gross estate for purposes of calculating federal tax. 2:22:00 PM DAVID SHAFTELL, Attorney, said he is a member of the group to which the sponsor referred. It includes attorneys and trust officers who have worked since 1996 to improve trust and estate statutes. A number of significant bills have passed giving Alaska the opportunity to be a leader in this area, he said. MR. SHAFTELL said SB 141 deals with two technical subjects. First, it clarifies that professionals can use a limited liability company as a business entity. The Division of Corporations wisely has overlooked that statutory ambiguity and approved the formation of LLCs. Although that has been the administrative practice, he said some of us worry about it ending up in court. 2:24:55 PM CHAIR FRENCH commented he doesn't know how the language could be wrongly construed, but he'll accept the suggestion to add the phrase, "including the rendering of a professional service." MR. SHAFTELL acknowledged the point and turned to Section 2, which deals with an extremely technical subject that has caused great concern among estate planners. Under 26 U.S.C. Sec. 2036(a)(2), if a person forms a trust or family limited liability partnership (LLP) or a family LLC and retains powers to effect the enjoyment of interests that the person has given away or sold, then all those interests will be pulled back into the founder's estate and taxed at his or her death. To avoid this problem a special manager must be appointed to have authority over distributions and liquidation of the LLC. To make this effective, AS 10.50.150(d) must be deleted. 2:29:18 PM CHAIR FRENCH clarified that Section 4 repeals subsection (d). MR. SHAFTELL agreed that Section 4 deals with the second purpose of the bill. CHAIR FRENCH commented that those who don't practice in this area of law approach it somewhat warily. When these bills come through he always has a glimmer of concern because he isn't conversant and experienced in these matters. However, nothing suggests that a wrong step has been taken and he doesn't expect anything different today. You and the other sponsors have been very straightforward, he said. CHAIR FRENCH closed public testimony and asked for discussion among the members. 2:30:58 PM SENATOR THERRIAULT disclosed that his wife practices in this area of law. Also, he along with legislative drafters wrote the first LLC law for Alaska. "It was one of my first bills," he added. SENATOR THERRIAULT motioned to report SB 141 from committee with individual recommendations and attached zero fiscal note. There being no objection, it was so ordered. At ease for paperwork.
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