Legislature(2019 - 2020)BELTZ 105 (TSBldg)

03/04/2020 01:30 PM Senate JUDICIARY

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Heard & Held
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Heard & Held
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                      SB 191-TRUSTS, TRUSTEES, COMMUNITY PROPERTY                                                           
1:51:02 PM                                                                                                                    
CHAIR     COGHILL       announced       the    consideration          of   SENATE      BILL     NO.                             
191,    "An    Act    relating       to   trusts      and    trustees,       including       trust                              
division,       the    powers     of   trustees,       delayed      gifts     to   trusts,      and                             
community property trusts; and providing for an effective date."                                                                
He    noted     that     in   response       to    discussion        during      the    previous                                
hearing, there were amendments for the committee to consider.                                                                   
1:53:09 PM                                                                                                                    
CHAIR      COGHILL       moved      to    adopt      Amendment        1,    work     order      31-                             
                                  A M E N D M E N T  1                                                                      
        OFFERED IN THE SENATE                                 BY SENATOR COGHILL                                                
               TO: SB 191                                                                                                       
        Page 6, line 22:                                                                                                        
               Delete "or a right accrued"                                                                                      
SENATOR MICCICHE objected for discussion purposes.                                                                              
1:53:36 PM                                                                                                                    
AIMEE      BUSHNELL,        Staff,       Senator       John      Coghill,       Alaska       State                              
Legislature,         Juneau,      Alaska,      sponsor      of   SB   191,    explained       that                              
Amendment       1   will     delete      language      from     Section      7,    the    savings                               
clause.      The   savings      clause     states,     "Notwithstanding           sec.    6(b)   of                             
this    Act,    this    Act   does    not   affect     an   action     or   proceeding       begun                              
before      the    effective        date     of    sec.    5    of   this     Act."      This     is                            
related      to    appreciation        and    income      of   community        property.       She                             
explained       that    community       property       is   a  way    for    married      couples                               
to   own   property      in   certain      states.     Alaska     is   different       from   most                              
She    said    in   Alaska,      married     couples      can    elect     to   have    some,    or                             
all    of   their     property      treated      as   community       property       by   stating                               
so   in    a   written      contract       or   a   trust     agreement.        This     type     of                            
ownership       in   Alaska     is   not   the    default      manner     in   which    property                                
is   held     by    married      couples      as   it    is   in    most     other     community                                
property       states.      If   all    of    the    couple's      property       is   owned      as                            
community       property,       then    all    assets     purchased       or   acquired       by   a                            
couple     during     their     marriage      are    owned    equally      by   both    spouses.                                
Debts     also     fall     under     the    umbrella       of    community        property       in                            
certain       circumstances.           Because       of     the     nature      of     community                                
property,       everything       that    comes     from    community       property      such     as                            
appreciation          and      income       is     usually       treated        as     community                                
property.       There     are    significant        income      tax    benefits      associated                                 
with    community       property.       She    related      a   scenario      to    illustrate.                                 
Assume      a  married      couple      purchased       a   building      for    $100,000       and                             
designated        it    as   community        property.       Over     time,     the    building                                
appreciated        and   is   worth    $1   million      at  the    time    of  the    husband's                                
death.     Since     the    building       is   designated       as    community       property,                                
the    widow     will    receive      full    fair     market     value     in   the    building                                
for    $1   million.       If   she    subsequently        sells     the    building       for    $1                            
million,      for    income     tax    purposes      it    would    be   treated      as   though                               
she    paid     $1    million      for     the    building       instead      of    the    actual                               
$100,000      paid.     As   a  result,      the   widow     would    not    pay   any    capital                               
gain    taxes.      Had    the    building      been     held    50/50     as   non-community                                   
property,       the   husband's       one-half      interest      basis     after    adjustment                                 
to    fair     market     value      would     be    $500,000,       and     the    widow's       50                            
percent      would     have    a  $550,000       basis     in   the   property       instead      of                            
$1   million.       The   widow     would     have    capital      gains    on    $450,000      due                             
to   appreciation.         Elimination       of   capital      gains    on   appreciation        at                             
death is the income tax benefit of community property.                                                                          
MS.    BUSHNELL       explained       that     without      clarification          provided       by                            
Amendment       1,   in   a   divorce      case    a  person's       right    to    potentially                                 
more    than     half    of    the    property's       appreciation         and    income     will                              
have    begun    accruing      when    they    set    up  the    community      property.       The                             
sponsor      does     not    wish    to    have    any    confusion       on    how    community                                
property is treated.                                                                                                            
1:56:43 PM                                                                                                                    
CHAIR     COGHILL     reiterated        that    Amendment       1  relates      to   an   accrual                               
on community property.                                                                                                          
1:57:13 PM                                                                                                                    
SENATOR MICCICHE removed his objection.                                                                                         
There being no further objection, Amendment 1 was adopted.                                                                      
1:57:41 PM                                                                                                                    
CHAIR      COGHILL       moved      to    adopt      Amendment        2,    work     order      31-                             
                                  A M E N D M E N T  2                                                                      
        OFFERED IN THE SENATE                                 BY SENATOR COGHILL                                                
               TO:   SB 191                                                                                                     
        Page 6, line 26:                                                                                                        
               Delete "Sections 5 and 8"                                                                                        
               Insert "Sections 5, 7, and 8"                                                                                    
SENATOR MICCICHE objected for discussion purposes.                                                                              
1:57:55 PM                                                                                                                    
MS.     BUSHNELL        explained        that     Amendment         2   would      provide       an                             
immediate        effective        date     to    Section       7,   the     savings       clause,                               
making      it   take     effect     immediately         with     Section      5,   related       to                            
community       property,       and   Section      8,   providing       retroactivity.          The                             
goal    is   to   prevent      the    savings     clause      from    having     an   effect     on                             
any    current      court     proceedings         by   providing       the    same     effective                                
date as the other sections related to Section 7.                                                                                
1:58:25 PM                                                                                                                    
SENATOR MICCICHE removed his objection.                                                                                         
There being no further objection, Amendment 2 was adopted.                                                                      
1:58:44 PM                                                                                                                    
SENATOR KIEHL moved to adopt Amendment 3, work order 31-                                                                        
                                  A M E N D M E N T  3                                                                      
        OFFERED IN THE SENATE                                 BY SENATOR KIEHL                                                  
               TO:  SB 191                                                                                                      
        Page 6, following line 5:                                                                                               
        Insert a new subsection to read:                                                                                        
               "(d)  A person that sells to a third party a                                                                     
        promise      that     is    treated       as    a   note     that     becomes      a                                    
        negotiable       instrument        under    (c)    of   this    section      shall                                      
        provide     written      notice     to   the    buyer     that    the   note    was                                     
        derived      from    a   promise      made    under     this    section,       that                                     
        consideration         was    not    provided      to    the    promisor,       that                                     
        the    note    is   not    backed      by   assets      or   collateral,        and                                     
        that    the   note    is   not    guaranteed       by   the    trustee     or   the                                     
        seller.      The   notice      must    be   in   at   least     14   point     bold                                     
        face    type.    A   buyer    may    void    the   sale    if   notice     is   not                                     
        provided under this subsection."                                                                                        
CHAIR COGHILL objected for discussion purposes.                                                                                 
SENATOR      KIEHL     explained       that     Amendment       3   relates      to   a   concern                               
raised      at    the     last     hearing       related      to    the     potential        abuse                              
related      to   the    "promise      of   a   gift"     to   a   trust    which     becomes      a                            
promissory       note    in   the   bill.     His   initial      suggestion       was   to   limit                              
who    could    purchase       the   promissory        notes    to   accredited        investors                                
and   regulated       financial       institutions,         which    would     guarantee      that                              
highly     sophisticated         investors       would    buy    these    promissory       notes.                               
He   worked     with    the   sponsor's       staff    and   advocates       for   the    bill   on                             
this      compromise         language.         Amendment         3    uses      a    disclosure                                 
approach.        Someone       used     the     term     "caveat       emptor"       or    "buyer                               
beware"      but    this    amendment        will    ensure     that     the    person     buying                               
one   of   these     notes     is  provided       a  disclosure       about     the   nature      of                            
the    promissory        note    to   make     an   informed       decision.       Amendment       3                            
would     not   limit     who    could    buy    or   sell    promissory        notes,     but   it                             
will provide a "heads up" to potential buyers.                                                                                  
2:01:03 PM                                                                                                                    
JONATHAN        BLATTMACHR,          Principal,         ILS     Management,          LLC,     Long                              
Island,      New    York,      said    he    believes       that    Mr.     Shaftel      and    Ms.                             
O'Connor       worked       on    the    language       in     Amendment       3    and    it     is                            
2:01:49 PM                                                                                                                    
DAVE    SHAFTEL,       Attorney,      Shaftel      Delman,      LLC,    Anchorage,        Alaska,                               
reviewed       the    language       in   Amendment        3   and    described       it    as    an                            
improvement to the bill.                                                                                                        
2:02:41 PM                                                                                                                    
SENATOR       MICCICHE       offered      his     view     that     Amendment       3    was    not                             
necessary       and    expressed       concern       about     the    language,       "that     the                             
note    is   not   backed     by   assets     or  collateral,        and   that    the    note    is                            
not    guaranteed        by    the    trustee      or    the    seller."       He   asked     what                              
would happen if the promise was backed by assets or collateral.                                                                 
MR.    SHAFTEL      acknowledged         that     was    a   good    point.      He    suggested                                
that      there      could      be     variable        language       in     the     disclosure                                 
statement       and   if   a  [promissory]        note    was    secured,      the   disclosure                                 
could be modified.                                                                                                              
CHAIR     COGHILL      related       his    understanding         that     these     promissory                                 
notes were purposefully not backed.                                                                                             
MR. SHAFTEL deferred to Mr. Delman.                                                                                             
2:04:28 PM                                                                                                                    
JAMIE    DELMAN,      Attorney,       Shaftel     Delman     LLC;    member,      Alaska     Trust                              
&   Estate      Professionals,          LLC,     Anchorage,        Alaska,       responded        to                            
Senator      Coghill's        question       on   whether       the    promissory        note     is                            
backed.      He  pointed      out   that    there     are   two   separate      transactions.                                   
The    first    transaction        is   the    initial      promise      to   make    a  gift    to                             
the    Alaska      Gift     Trust.     The     second     transaction,          which     Senator                               
Kiehl     raised      concerns      about,      is   the    potential       of   the    unlikely                                
sale    of    that    negotiable        instrument       to    a  third     party     after     the                             
promise      was   made.    Senator      Micciche      raised     the   concern      that    there                              
would     not   be   any    restriction        on   a   trustee     deciding       to   back    the                             
promissory       note    with    other     assets     of   the   trust,      in  the    event     of                            
a   sale.      The     second      sales      transaction         is    separate       from     the                             
original gift transaction, he said.                                                                                             
CHAIR COGHILL summarized the explanation.                                                                                       
MR.    DELMAN     replied      the    second      transaction        would     be   related       to                            
the first transaction, but it is not the same transaction.                                                                      
SENATOR      MICCICHE      said     his    point    is    that    the    promise      of   a  gift                              
might     be   secured      by   any   number      of   methods.      This    language       seems                              
to   say    the    same    written      notice     is    required      whether      or   not    the                             
promise      of   a  gift    is   guaranteed       by   the   trustee      or   the   seller.      A                            
person     may    have    a   reason      to   make    a   promise      for   something       that                              
has    a  set    value,     and   that     value    may    be   different       in   the   future                               
due     to    earnings        potential        that     has     a    set     value      that      is                            
guaranteed.        This    language      seems    to   say   that    none    of   them    will   be                             
guaranteed.         He    offered       that     all    of     this     would     have     a    low                             
probability        of   happening,       but    if   Amendment       3  makes     someone     feel                              
better,       there      should      be    a    separation         between      a    guaranteed                                 
promise and one that is not guaranteed.                                                                                         
2:07:33 PM                                                                                                                    
MR.    DELMAN     agreed     the   committee       could     amend    Amendment       3  to   make                              
it   clear     that    it   does    not   prohibit       guaranteeing        the    [promissory                                 
MR.    DELMAN     suggested       the    committee       could     amend    Amendment       3,    on                            
lines     6-7,    to   read,     "that     the    note    is   not    backed     by   assets      or                            
collateral,        and   whether      the   note    is   guaranteed       by   the   trustee      or                            
the    seller."       He    explained       the    proposed       change,      on    line    7    to                            
delete      "that"      and    insert      "whether"       and     after     "is"     to   delete                               
"not" before "guaranteed."                                                                                                      
2:09:12 PM                                                                                                                    
2:10:15 PM                                                                                                                    
CHAIR COGHILL reconvened the meeting.                                                                                           
2:10:28 PM                                                                                                                    
SENATOR       REINBOLD        asked      for      a    simple      description          and     the                             
intention of Amendment 3.                                                                                                       
SENATOR      KIEHL    explained       that    Amendment       3   would    provide      a  notice                               
to    consumers         who     potentially         might      buy     a    promissory        note                              
[established        by   the   Alaska     Trust     Gift].     He   envisioned       this    would                              
probably      pertain      to  family      members     of   the   person     who    established                                 
the    trust.     However,      the   potential       exists     for    someone      to  use    the                             
note    or   negotiable        instrument       in   unethical       ways.     The   disclosure                                 
would    ensure     that    the    potential      buyer     has   a  "heads     up"   to   take    a                            
closer      look    at   the    transaction.         This    approach       would     not    limit                              
who    can     trade     in    these      notes     since      doing     so    could      present                               
problems for the trusts.                                                                                                        
2:12:56 PM                                                                                                                    
CHAIR      COGHILL       explained         that     the      concept       is    to     make     an                             
irrevocable        gift    to   receive      estate     tax    exemptions.        The   question                                
is   if   the    language      in   the    bill    allows     a  person      to   do   something                                
less     than      honorable        by    gifting       without       notifying        potential                                
beneficiaries         of   the    trust.     He    suggested       that    was    a  reasonable                                 
SENATOR      REINBOLD      asked    for   the    effect     if   a  verbal     commitment       was                             
made.     She    asked    who    the    testifiers       were     and   what    organizations                                   
they represent.                                                                                                                 
2:14:43 PM                                                                                                                    
ABIGAIL      O'CONNOR,       Attorney,       O'Connor       Law,    LLC;     Vice    President,                                 
Alaska      Trust    &   Estate      Professionals,          Anchorage,       Alaska,      stated                               
she   has    been    involved      in   a  group     called     Alaska     Trust     and   Estate                               
Professionals,         a   group    whose     sole    interest      is  helping      to   improve                               
Alaska's statutes regarding trusts and estates.                                                                                 
She   advised      that    the   promise      to  make    a  gift    has    to  be   in   writing                               
and    the    [negotiable        instrument]        being     sold     would     be   a   written                               
promise      to   a  trust.      These    are    safeguards       in   the    bill.     A  person                               
cannot make a verbal promise under this statute.                                                                                
2:16:42 PM                                                                                                                    
CHAIR COGHILL directed attention to Section 4, which is the                                                                     
Alaska Gift Trust.                                                                                                              
CHAIR COGHILL solicited a motion to withdraw Amendment 3 to                                                                     
allow time to craft the sponsor's intent.                                                                                       
2:17:32 PM                                                                                                                    
SENATOR KIEHL withdrew Amendment 3.                                                                                             
SENATOR      MICCICHE       acknowledged         the    concerns       raised.      He    offered                               
his     view     that      making      a    buyer      beware       statement        for     every                              
promissory        note     that     becomes       a   negotiable        instrument        is    not                             
reasonable.        He   said    he   was    willing      to   work    with    the    sponsor     on                             
language, but it had limited value.                                                                                             
CHAIR COGHILL announced that Amendment 3 is withdrawn.                                                                          
2:18:40 PM                                                                                                                    
CHAIR COGHILL moved to adopt Amendment 4, work order 31-                                                                        
                                  A M E N D M E N T  4                                                                      
        OFFERED IN THE SENATE                         BY SENATOR COGHILL                                                        
               TO:   SB 191                                                                                                     
        Page 6, following line 5:                                                                                               
        Insert a new subsection to read:                                                                                        
               "(d)  A married person who intends to make a                                                                     
        promise      under      this    section       shall     give     the     person's                                       
        spouse     30   days'    written      notice     that    the   person     intends                                       
        to    make      the     promise.       The     notice       must     adequately                                         
        disclose      the   terms     of  the    promise,      the   amount     of   money                                      
        to   be   transferred,        the    name    of   the   trust     to   which    the                                     
        money    will    be   transferred,        the    name   and    address     of   the                                     
        trustee       of     the      trust,       and      the     identity        or     a                                    
        description        of    the    beneficiaries          of    the    trust.      The                                     
        person's spouse may waive the notice in writing."                                                                       
SENATOR MICCICHE objected for discussion purposes.                                                                              
2:19:14 PM                                                                                                                    
MS.    BUSHNELL      referred      to   page     6,   line    5,   and   read     Amendment      4,                             
which     was   crafted      to   address     a   member's      concern.      The    purpose      is                            
to    add     good     practice        without       adding      language       that      is    too                             
restrictive        and    devalues      the    note.    The    goal    is   to    help    married                               
couples        who     intend        to     make      gift      trusts       to     have      good                              
recordkeeping,          so  at   the    time    of   the   promisor's        death,     the   debt                              
against      the    estate     will     not   come     as   a   surprise      and    negatively                                 
impact the surviving spouse or beneficiaries.                                                                                   
2:20:17 PM                                                                                                                    
SENATOR      REINBOLD      moved     to  adopt     an   amendment       to   Amendment       4,   on                            
line    8,   to   delete,      "The    person's      spouse     may   waive     the   notice      in                            
CHAIR COGHILL objected for discussion purposes.                                                                                 
2:21:02 PM                                                                                                                    
SENATOR      HUGHES      said     she    would     like    to    discuss      the    underlying                                 
amendment        to     better       understand         the     proposed        amendment        to                             
Amendment 4.                                                                                                                    
CHAIR      COGHILL       asked      Mr.    Delman       if    any     technical        legal      or                            
practical challenges would arise from Amendment 4.                                                                              
2:22:12 PM                                                                                                                    
MR.    DELMAN     asked     why    the    committee       would    not    want    a   spouse      to                            
have    the   ability      to  waive     the   notice     in   writing.      For   example,      if                             
the    wife    would     like    to    promise      to   make    a   gift    to   a   trust     and                             
informs      her    husband      and   he    agrees,      the   couple      may   not    want     to                            
wait    30   days    to   finalize      the    gift.    He   advised      members     that    most                              
spousal       rights      allow      for     a    written      waiver       in    writing.        He                            
questioned why this should be different.                                                                                        
SENATOR      REINBOLD      expressed      concern      that    a  spouse     may   have    access                               
to   his    or   her    spouse's      email.      She    asked    if    the   written      waiver                               
should     have    a  notary     requirement        to   make   sure    that    the    spouse    is                             
2:23:43 PM                                                                                                                    
MR. DELMAN asked her to clarify the email example.                                                                              
SENATOR      REINBOLD       expressed       concern      that     the    language      does     not                             
say   how    the   notice     could    be   waived,      which    might     create     potential                                
MR.    DELMAN      asked     if   she    would      be   more     comfortable        if   it    was                             
amended       to     say     the     person       may      waive      the     notice       in     an                            
acknowledged writing.                                                                                                           
SENATOR REINBOLD suggested that it should be notarized.                                                                         
MR.    DELMAN     answered      that    adding     notarized       would     be   fine    because                               
a waiver would typically be notarized.                                                                                          
CHAIR      COGHILL       questioned         how     that     would      affect       the     whole                              
2:25:55 PM                                                                                                                    
SENATOR      HUGHES     asked    whether      the   promise     would     be   invalid     if   the                             
notice was not issued.                                                                                                          
MR.     DELMAN      suggested        that     the    committee        may     wish     to    amend                              
[Amendment       4]   to   provide      that    the   promise      of   a  gift    is   voidable                                
if proper notice has not been provided.                                                                                         
SENATOR        HUGHES       related       a     scenario        to     illustrate         similar                               
concerns,       such   that    in   a  second     marriage      a   husband     wants     to  gift                              
$10    million      in   community       property       to   a   trust     for   his    children                                
from    a   prior    marriage.       She    asked     if   the   second      wife    would    need                              
to acknowledge the gift by signing.                                                                                             
2:28:05 PM                                                                                                                    
MR.    DELMAN     asked     if   her    scenario      relates      to   community       property                                
being     gifted     or   if   it   is   a   promise      to   make    a   gift    that    is   not                             
necessarily community property.                                                                                                 
CHAIR    COGHILL      interjected        that    the   amendment       affects     the    promise                               
to   make    a  gift     to   a  trust     under    the    new   section      of   law.    If   the                             
scenario      relates      to  trusts     the    committee      may    wish    to  clarify      how                             
Amendment 4 generally would relates to trusts.                                                                                  
SENATOR       HUGHES      acknowledged         that     estates      and     trusts      can    get                             
sticky     in   second     marriages,        especially       when    one    or   both    spouses                               
have    children       from    the    first     marriage.       For    example,       suppose      a                            
written      notice     for    the   promise      of   a   gift    is   issued,      dated,     and                             
signed,      but   put    in   a  desk.     Within     30   days    of    the   issuance,       the                             
bequeathing        spouse      passes     away    and    the    surviving       spouse     states                               
he    or    she     did     not     get    notice.       She     wondered       if     requiring                                
notarization        would     ensure     that    the    surviving       spouse     is   aware    of                             
the   gift    such    that    both    spouses     must    sign.     She   expressed       concern                               
that    the   language      in   Amendment       4,   "The   person's       spouse     may   waive                              
the    notice     in   writing,"      could     be   interpreted        to   mean    the   spouse                               
could     sign    it   after     his   or   her    spouse     dies    because      she   did    not                             
receive any written notice.                                                                                                     
2:31:06 PM                                                                                                                    
CHAIR    COGHILL      suggested       that    her   questions       are   related     to   trusts                               
in   general.      Amendment      4   relates     to   a  promise      of  a   gift    that   must                              
be   in   writing     and    be   signed     by   the   person     making     the    trust.     The                             
language       being      deleted       by    the    amendment        to    Amendment        4    is                            
intended       to   make     sure    that     people     affected       by   the    trust     will                              
receive notice, especially the person's spouse.                                                                                 
2:31:33 PM                                                                                                                    
SENATOR      MICCICHE      asked     if   there    is   a   standard      legal     requirement                                 
for the term "written notice."                                                                                                  
2:32:00 PM                                                                                                                    
MR. DELMAN deferred the question to Ms. O'Connor.                                                                               
2:32:24 PM                                                                                                                    
MS.    O'CONNOR      agreed      that    written      notice      is   a   formal     term.     She                             
recalled      that    AS   13.36.100       covered      it,   but    her   colleagues        could                              
verify     the    statute.       She   reported       that    written      notice     for    trust                              
proceedings        are   provided      via    the   U.S.    Postal     Service,      FedEx,     and                             
United Parcel Service (UPS).                                                                                                    
CHAIR    COGHILL      said    the   [amendment       to   Amendment       4]   that    is  before                               
the    committee      [would      delete     the   language],        "The    person's      spouse                               
may    waive     the    notice      in   writing."        He   asked     if    that    could      be                            
gamed,     such    that     a  person     could     be   given     a  written      notice     that                              
wasn't       sent     to    the     proper       address,       or     through       duress       or                            
misunderstanding           the    person     did    not    understand        the    implication                                 
of the notice.                                                                                                                  
MS.   O'CONNOR      answered      that    the    notice     could    be   gamed    by   a  person                               
committing        fraud,      just    as    with    any    other     legal      document.       She                             
explained       that     duress      and    undue     influence       apply     to    wills     and                             
trusts     and    are    a  legal     basis     to   invalidate       any    estate     planning                                
document      proven      to   be   procured       through     fraud,      duress,      or   undue                              
influence. This circumstance would not be any different.                                                                        
She    said    requiring       the    document       to   be    notarized       could     prevent                               
fraud     but     undue     influence        and    duress      in    estate      planning        is                            
complex      and    can    be    a   long    standing       issue     in    families,       so    it                            
cannot     be   prevented      in   statute.      Instead,      people     must    prove     undue                              
influence occurred and undo the document.                                                                                       
MS.    O'CONNOR      explained       that    the   reason     for    the   express      language                                
to   waive     the    notice     is   because      it    could    be    burdensome       for    the                             
family     to   wait    30    days.    She    suggested       that    the    waiver     could    be                             
removed      if    members       are    uncomfortable         with     it,    or    reduced       to                            
perhaps      20   days.    She    acknowledged        that    30   days    was    an   arbitrary                                
number in the first place.                                                                                                      
2:37:39 PM                                                                                                                    
CHAIR       COGHILL        suggested          that      members         might       need      more                              
2:37:52 PM                                                                                                                    
SENATOR      MICCICHE       referred      to    AS   13.36.100,        which     is   trust     law                             
and    covers      serving      a   report.       He   said     how    it    is    received       is                            
covered      in    AS    13.06.120,        but    it    does     not    go    beyond      written                               
notice     to   mention      signing      or   anything      more    elaborate.       Thus,     the                             
written      notice     in   Amendment       4  seems     consistent       with    other     trust                              
2:38:55 PM                                                                                                                    
CHAIR    COGHILL      explained       the   intent     of   Amendment      4   is  that    when    a                            
person       makes      a   promise       to     transfer       to     a    trust      under      AS                            
13.36.305,       the    new   Alaska     Gift     Trust,     the   spouse     would     be   given                              
written      notice,      in    part,     in    case    of    estrangement         or   tension.                                
However,       if   none    exists,      the    spouse     could     waive     the    notice      in                            
writing.      He   asked    the    sponsor     of   the   amendment       to   Amendment      4  if                             
that satisfied her question.                                                                                                    
2:39:37 PM                                                                                                                    
SENATOR      REINBOLD      said    she   didn't     have    an   issue    with    Amendment       4.                            
Her    concern      is   to   ensure     that    spouses      are    notified      and    consent                               
[to   the    promise      of   a  gift].     She    suggested      that    the    entire     trust                              
law should be tightened up and have more bookends.                                                                              
CHAIR     COGHILL      said    adding      the    language      to   allow     the    spouse      to                            
waive     the    notice     in   writing      would     provide      a   means    to    show    the                             
spouse     was    informed       and   in   agreement.        He   suggested       that    taking                               
out the language could create ambiguity.                                                                                        
SENATOR      REINBOLD       asked     if   "in    writing"       could     be   a   text    or   an                             
email    and    how   one   would     identify      the   author.      The   person's      spouse                               
may     have     access      to    passwords        to    his    or     her    accounts.        She                             
expressed concern that Amendment 4 might create some loopholes.                                                                 
2:42:23 PM                                                                                                                    
SENATOR      MICCICHE      said    he  would     be   satisfied      if   the   last    sentence                                
provided      acknowledgement           for   notification         or   waiving      the   notice                               
in   writing.       He    suggested       it    could     read,     "The     person's      spouse                               
must    acknowledge        notification         or   waive     the    notice     in    writing."                                
That would provide notification either way.                                                                                     
CHAIR    COGHILL      interjected        that    there    is   language      in   Section     4   on                            
page     5,    lines      19-20,      which      reads,      "(2)     the     promise      is     in                            
writing,      signed      by   the   person,      and    delivered       to   the    trustee      of                            
the    trust;      ?"   He    explained       that     the    [grantor/settlor]           of    the                             
trust     must    qualify,       promise      to   make    the    gift     in   writing,      sign                              
the    document,        and     deliver      it    the     trustee      of    the    trust.       He                            
suggested       language,      "The    person's      spouse     may    waive    the    notice     in                            
writing,      signed     by   the    person,     and    delivered       to   ?"  is   to   ensure                               
that    it    is   actually       acknowledged         and   delivered.        He   offered       to                            
work    on   the    language      because     he   understood        the   concern      that    the                             
notice might be glossed over in some way.                                                                                       
2:44:30 PM                                                                                                                    
SENATOR      HUGHES     referred      to   page     5,   line    19,   which     goes    back    to                             
the    concern      she    raised      earlier      about     the    husband      in   a   second                               
marriage      giving     $10   million      to   children      from    his   first     marriage.                                
The    husband     would     sign    the   promise,       but   the    second     spouse     would                              
not.    She    said     she    heard     Senator      Reinbold      mention      consent.       She                             
pointed      out    that    receiving        notice     should      not   be    confused      with                              
consent,        unless       acknowledgement           is     a    term      that     could       be                            
construed       as   consent.      The    language      in    Amendment       4  does    not    ask                             
the    non-bequeathing          spouse     to   consent,       just    to   make     the   spouse                               
aware that the promise of a gift has been issued.                                                                               
CHAIR     COGHILL       suggested       the    committee        review      who    can    make     a                            
trust     and   the    reason     the    person     has   the    authority       to   do   so   and                             
identify      the    beneficiaries         of   the    trust.      He   directed      his    staff                              
to    work      with     committee        members        on    language        to    provide       a                            
safeguard       for   the    surviving       spouse.     He   emphasized        that    a  spouse                               
has    every      right     to    make    a   trust      under     the    bill,      but    it    is                            
important       to   make    sure    that    those    affected       by   it   are   [notified]                                 
because the trust is an irrevocable trust.                                                                                      
2:46:21 PM                                                                                                                    
CHAIR     COGHILL      solicited       a   motion      to   withdraw      the    amendment        to                            
Amendment        4.    He    suggested        that      the    committee        could      review                               
revised      language       for    Amendment        3   and    Amendment       4   at    a   later                              
2:46:34 PM                                                                                                                    
SENATOR REINBOLD answered yes.                                                                                                  
[The    committee       treated      her   response      as   a   motion     to   withdraw      the                             
amendment to Amendment 4.]                                                                                                      
2:46:38 PM                                                                                                                    
CHAIR COGHILL withdrew Amendment 4.                                                                                             
CHAIR     COGHILL       remarked       that     it    is    important        for    members       to                            
understand       the    context      in   which     the    amendments       are    made    and    be                            
sure that the notice requirements are clear.                                                                                    
2:47:09 PM                                                                                                                    
SENATOR      MICCICHE      asked     members      to   consider       that    the    spouse     may                             
not    have    any    legal     right     to   the    asset     if   it    is   not    community                                
property.       He   remarked      that    it   is   nice    to   provide     notice,      but    as                            
the     sponsor      works      on    new     language       for     Amendment       4,    it     is                            
important to be careful not to create a right.                                                                                  
2:47:41 PM                                                                                                                    
SENATOR      REINBOLD      envisioned       that    a  single     person     could     be  making                               
a   trust     for     their     children,       but     some    beneficiaries          might      be                            
adversely       affected.       She    suggested       that    requiring       the    notice     to                             
be notarized would provide an additional safeguard.                                                                             
2:49:22 PM                                                                                                                    
KEVIN      WALSH,       Certified        Public       Accountant;         Co-Owner,        Walsh,                               
Kelliher      &   Sharp,     Fairbanks,       Alaska,      voiced     support      for   SB   191.                              
All     of    his    clients       have     Alaskan       roots.      His     firm     routinely                                
discusses        community       property       options       with     their     clients,       and                             
many     hold      a    significant         part      of    their      assets      as     elected                               
community       property.        His    firm     has    seen     firsthand       the    benefits                                
that    community       property      options      provide      to   Alaskan      families.       In                            
addition,        the     trusts      routinely        include       unique      Alaska       trust                              
features       and    if   not,     his    firm    recommends        the    trusts     be    fixed                              
using     Alaska's      very    modern     trust     laws.    He   offered      his   view    that                              
the    legislature's         prior    work    in   allowing       community       property      and                             
unique     Alaska      trust     provisions       has    benefited       and    will    continue                                
to   benefit     members'      constituents         and   his    firm's     clients,      who   are                             
Alaskans.       SB  191    will    improve     the    tools    for   Alaskans      and    others.                               
He    commented        that      he    was    impressed        by     the    manner       of    the                             
discussion       today     and    the   deference       to   the   comments       and   concerns                                
of others.                                                                                                                      
2:51:45 PM                                                                                                                    
CHAIR     COGHILL       stated      that    committee        work     allows      for    a   broad                              
latitude      of   discussion.        He   said     it   is   important       to   ask   how    the                             
[Alaska Gift Trust] works and what can be done to improve it.                                                                   
2:52:29 PM                                                                                                                    
CHAIR COGHILL stated that he would hold SB 191 in committee.                                                                    

Document Name Date/Time Subjects
Fiscal Note SB 8-DPS-CJISP2.28.20.pdf SJUD 3/4/2020 1:30:00 PM
SB 8
SB 191 Amendment A.1 3.3.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 191
SB 191 Amendment A.2 3.3.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 191
SB 191 Amendment A.5 3.3.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 191
SB 191 Amendment A.6 3.3.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 191
SB 8 Sectional Analysis 2.25.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 8
SB 8 Sponsor Statement 2.25.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 8
SB 8 Ver A 2.25.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 8
SB 8 Supporting Document - State Marijuana Criminal Record Confidentiality Actions 2.25.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 8
SB 8 Updated Supporting Document - Leg Research Report 3.4.2020.pdf SJUD 3/4/2020 1:30:00 PM
SB 8