Legislature(2009 - 2010)BELTZ 211
04/16/2009 03:45 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB60 | |
| HB108 | |
| HB177 | |
| HB175 | |
| HB222 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 60 | TELECONFERENCED | |
| + | HB 108 | TELECONFERENCED | |
| + | HB 177 | TELECONFERENCED | |
| + | HB 175 | TELECONFERENCED | |
| HB 222 | |||
SB 60-UNIFORM PROBATE CODE; TRUSTS, WILLS
3:50:30 PM
CHAIR PASKVAN announced SB 60 to be up for consideration. [CSSB
60, labeled 26-LS0320\E, had been adopted on 3/31/09.]
TREVOR FULTON, staff to Senator McGuire, sponsor of SB 60, said
he was available to answer questions.
DAVID SHAFTEL, attorney in private practice, said his office
works with estate planning and estate and trust administration.
For 12 years he has been a member of an informal group of
attorneys and trust officers who have worked with the Alaska
Legislature on bills in this area. He summarized that SB 60 has
a provision to allow the designation of a representative for
incapacitated people, it updates and correlates a provision
relating to the augmented estate so it is consistent with other
provisions relating to self-settled discretionary spend-thrift
trusts.
3:53:00 PM
SENATOR DAVIS joined the committee.
MR. SHAFTEL continued explaining that SB 60 enacts a new
provision dealing with the pre-mortem process of establishing
capacity of a person who has drafted a trust and where there are
issues concerning whether that person had capacity or whether
there was duress or undue influence, fraud or similar claims.
That person under this bill can file an action in court and have
a proceeding to determine that the capacity and the lack of
those improper influences so that the will or trust would be
upheld as valid. That person can participate in the process
while he or she is alive and has the best evidence available
concerning capacity and intent rather than waiting for the
person to die to go through the process.
3:55:24 PM
The bill also provides a venue provision for probate of the will
of a non-resident who may have property in the state or not. It
also allows a personal representative or trustee to make a
designation about discretionary distributions that are coming
from capital gains rather than principal, which allows for
income tax planning, and that the legislature knows affects
every resident in the state.
3:57:31 PM
SENATOR THOMAS said the court can establish validity of the will
and make other findings. Can the court find it invalid, as well?
MR. SHAFTEL replied yes; they could find a lack of capacity or
some other event took place and the instrument should not be
given legal effect in that case.
CHAIR PASKVAN said his question deals with section 4 and the
exclusion from the augmented estate of an irrevocable trust with
the settlor designating himself as a discretionary beneficiary.
He asked what policy reason there is for excluding that from the
augmented estate.
MR. SHAFTEL replied that this trust is created before a
marriage. For example if someone creates an irrevocable trust
for children from a first marriage, it would be treated the same
as if the property were transferred before marriage. The
augmented estate is property that the spouses have during
marriage; and that is what a spouse can collect against after
the death of his spouse rather than what he/she was left in the
will. For instance, he could choose to take a third of an
augmented estate rather than what was left in the will.
So, this provision says if you create this trust 30 days before
marriage, it will be excluded from the estate. It is an
irrevocable trust with an independent trustee and while the
trustee could make distributions to the person who created it,
it is treated as property that was not acquired during a
marriage. Eleven other states have excluded it along with
Alaska. This is not a manipulative tool to hide assets from your
spouse after you are married. It would have had to be created
before marriage.
CHAIR PASKVAN asked what prompted the change in policy if a
settlor is a beneficiary under the trust they themselves
established. He asked if it is includable in the augmented
estate currently.
4:02:54 PM
MR. SHAFTEL replied that it is included, and he said section 2
(page 2) clarifies if it's done prior to marriage it is
consistent with what law is today.
CHAIR PASKVAN asked if this change would apply to Alaskans only
or could it be used by non-residents to create trusts in Alaska
and have that potentially affect an augmented estate analysis in
another state.
MR. SHAFTEL replied it applies to probate in Alaska; this
provision couldn't apply in any other state.
CHAIR PASKVAN asked if the exclusion from the augmented estate
would apply only to Alaska residents.
MR. SHAFTEL replied that would be his understanding.
4:04:58 PM
CHAIR PASKVAN asked him to clarify the intent of excluding the
surviving spouse and child from the augmented estate.
MR. SHAFTEL replied that existing statute requires that in any
probate proceeding the surviving spouse and child will receive
notice of everything.
CHAIR PASKVAN asked if the irrevocable trust with the settlor as
a discretionary beneficiary is includable within the probated
estate.
MR. SHAFTEL replied, "No it would not be, if it was done before
marriage."
4:08:47 PM
SENATOR THOMAS remarked that the hearing and notice section on
page 11, AS 13.12.565, indicates that the spouse, the children,
the heirs of the testator and settlor shall be notified.
4:09:58 PM
DOUG BLATTMACHR, President and CEO, Alaska Trust Company,
supported SB 60.
4:10:57 PM
RICH HOMPESCH, Fairbanks attorney, supported SB 60.
4:11:44 PM
CHAIR PASKVAN closed the public hearing.
SENATOR THOMAS moved to report CS SB 60(L&C) from committee with
individual recommendations and attached zero fiscal note. There
were no objections and it was so ordered.
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