Legislature(1997 - 1998)
04/28/1998 01:35 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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.
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