Legislature(1995 - 1996)
02/09/1996 01:10 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
February 9, 1996
1:10 P.M.
MEMBERS PRESENT
Representative Brian Porter, Chairman
Representative Joe Green, Vice Chairman
Representative Con Bunde
Representative Al Vezey
Representative Cynthia Toohey
Representative David Finkelstein
MEMBERS ABSENT
Representative Bettye Davis
COMMITTEE CALENDAR
HOUSE BILL 459
"An Act relating to the jurisdiction governing a trust, to
challenges to trusts or property transfers in trust, to the
validity of trust interests, and to transfers of certain trust
interests."
- HB 459 PASSED OUT OF COMMITTEE
HOUSE BILL 293
"An Act relating to the use of force in defense of persons or
property.
- HB 293 PASSED OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 459
SHORT TITLE: TRUSTS & PROPERTY TRANSFERS IN TRUST
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-PG ACTION
01/31/96 2580 (H) READ THE FIRST TIME - REFERRAL(S)
01/31/96 2580 (H) JUDICIARY
02/09/96 (H) JUD AT 01:00 PM CAPITOL 120
02/12/96 2719 (H) JUD RPT CS(JUD) 4DP 2NR
02/12/96 2720 (H) DP: PORTER, GREEN, TOOHEY, VEZEY
02/12/96 2720 (H) NR: BUNDE, FINKELSTEIN
02/12/96 2720 (H) ZERO FISCAL NOTE (COURT)
02/12/96 2720 (H) REFERRED TO RULES
BILL: HB 293
SHORT TITLE: USE OF FORCE DEFENDING PERSON OR PROPERTY
SPONSOR(S): REPRESENTATIVE(S) VEZEY,James
JRN-DATE JRN-PG ACTION
04/05/95 1026 (H) READ THE FIRST TIME - REFERRAL(S)
04/05/95 1026 (H) JUDICIARY
04/21/95 (H) JUD AT 01:00 PM CAPITOL 120
04/21/95 (H) MINUTE(JUD)
04/22/95 (H) JUD AT 11:00 AM CAPITOL 120
04/22/95 (H) MINUTE(JUD)
02/09/96 (H) JUD AT 01:00 PM CAPITOL 120
02/12/96 2719 (H) JUD RPT CS(JUD) 2DP 1DNP 3NR
02/12/96 2719 (H) DP: VEZEY, TOOHEY
02/12/96 2719 (H) DNP: FINKELSTEIN
02/12/96 2719 (H) NR: PORTER, GREEN, BUNDE
02/12/96 2719 (H) ZERO FISCAL NOTE (DPS)
02/12/96 2719 (H) REFERRED TO RLS
02/12/96 2739 (H) COSPONSOR(S): JAMES
WITNESS REGISTER
RICHARD THWAITES, JR., ESQ.
The Law Offices of Richard Thwaites
500 L Street, Suite 301
Anchorage, Alaska 99501
Telephone: (907) 277-1595
POSITION STATEMENT: Provided information regarding HB 459
BOB MANLEY, ESQ.
Trust and Estate Planning
State Chairman
American College of Trust and Estate Council
324 East Cook
Anchorage, Alaska 99501
Telephone: (907) 263-8251
POSITION STATEMENT: Testified in support of HB 459
BRIAN BRUNDIN, ESQ., CPA
509 W. 3rd Avenue
Anchorage, Alaska 99501
Telephone: (907) 263-8223
POSITION STATEMENT: Testified in support of HB 459
LT. CHRIS STOCKARD
Department of Public Safety
Planning and Research Division
450 Whittier Street
Juneau, Alaska 99811-1200
Telephone: (907) 465-4322
POSITION STATEMENT: Testified against HB 459
BERNARD GOODNO
P.O. Box 92
Delta Junction, Alaska 99737
Telephone: (907) 895-4000
POSITION STATEMENT: Testified against HB 459
GENE OTTENSTROER
P.O. Box 1059
Delta Junction, Alaska 99737
Telephone: (907) 895-4805
POSITION STATEMENT: Testified against HB 459
ANNE D. CARPENETI, Assistant Attorney General
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3428
POSITION STATEMENT: Provided information regarding HB 459
ACTION NARRATIVE
TAPE 96-17, SIDE A
Number 000
CHAIRMAN BRIAN PORTER called the House Judiciary committee meeting
to order at 1:10 P.M.. Members present at the call to order were
Representatives Green, Bunde, Toohey, and Vezey. Representative
Finkelstein arrived at 1:12 P.M. Representative Davis was absent.
HB 459 - TRUSTS & PROPERTY TRANSFERS IN TRUST
Number 084
REPRESENTATIVE VEZEY introduced HB 459 for discussion as sponsor.
He stated that this legislation resulted as an effort to help
create a financial industry for Alaska. This legislation would
give Alaska the strongest trust laws in the country with the
possible exception of Missouri and it fits well in the overall
legal structure of Alaska. Alaska has no sales tax or an income
tax, hence transfers of money are not excessively taxed. The major
changes this bill would establish, firstly, that it creates a trust
that is irrevocable, it is not invadable by creditors, and at the
same time it is set up to prevent any attempts at fraudulent
transfers. Secondly, it allows trusts to be set up in perpetuity.
REPRESENTATIVE VEZEY likened the formation of these trusts to that
of the formation of a corporation. The economic growth of the
United States is tied to the creation of corporations. The idea of
the corporate structure has existed since Roman times. As the
United States began to grow the need for the corporate structure to
allow for the accumulation of large amounts of capitol, limiting
the liability of the investors and providing for continuity became
stronger and stronger. After the Civil War the laws surrounding
special status privileges associated with corporations were
abolished to create more equality. Anyone could then start a
corporation, which would be treated the same as any other.
REPRESENTATIVE VEZEY went on to add that in 1868 the United States
adopted the 14th amendment. Subsequent to this, the Supreme Court
overturned what amounted to 2000 years of legal precedence by
stating that a corporation was entitled due process just like a
legal person. The rest is history. Representative Vezey stated
that Alaska has an opportunity as parallel to this illustration, in
that the laws governing trusts have become convoluted over the
years so that a trust is no longer a legal entity unto itself, it
is not necessarily sheltered from creditors. Trusts can still be
invaded and they cannot continue on in perpetuity such as a
corporation can. This bill attempts to create the concept that a
trust is a legal entity just like a person, and exist in
perpetuity.
REPRESENTATIVE VEZEY felt as though this trust concept could be a
tool for the state to bring investment capitol to the state. Even
though not all this capitol would stay in Alaska, just the business
of handling this money could create an industry to rival Wall
Street. He noted that there is a need for this service. This is
why large sums of money leave the United States to bank accounts in
the Cayman Islands and the Bahamas, etc. He added that there were
complicated legal concepts related to these trusts which would need
explanation and he then turned the discussion over to Mr. Thwaites.
Number 497
REPRESENTATIVE CON BUNDE questioned the effectiveness of the
Missouri statutes regarding these trusts.
REPRESENTATIVE VEZEY pointed out that there is an uncertainty in
the minds of the investment community regarding the interpretation
of the Missouri statutes, therefore people are not willing to
gamble on the security that they'd like to think they're getting
there.
Number 565
RICHARD THWAITES, ESTATE PLANNING ATTORNEY, testified regarding HB
459. Mr. Thwaites has been an estate planning attorney since the
early 70's and has worked for First National Bank of Alaska in
their trust department and is currently a fellow of the American
College of Trust and Estates Council. There are seven fellows in
the State of Alaska. This organization recognizes the long
standing tenure of those practicing in the area for at least ten
years. It is required that a fellow either write or teach
regarding estate law and then they are elected to the national
organization.
MR. THWAITES stated that in this capacity the fellows have
discussed the evolution of trust law as it exists in the United
States today. In the past ten years there has been a redevelopment
of stricter laws, which this present bill addresses.
MR. THWAITES continued that this particular bill focuses on an
asset protection type of trust, very similar to off shore
jurisdictions such as the Cayman and Cook Islands. Recently, the
State of Alaska extended limited liability company protection to
entities which were formally operating as partnerships. If these
entities chose to opt for the correct format, there is some
additional liability protection afforded them. This trust devise
takes this same concept and carries it over to individuals. It is
possible that individual assets, which are not connected to
fraudulent transfers or subject to any claims, can be placed
irrevocably into a trust. This does mean though that the settlor
(person creating the trust) no longer has any say in the management
of the trust, other than initially creating it.
MR. THWAITES offered that the evolution of law in the United States
and England has been if the irrevocability can go back to the
settlor, this trust would be considered invadable. This proposed
devise permits the settlor or creator to be one of the class of
beneficiaries which can receive benefits from the irrevocable
trust. This concept is currently attracting what is thought to be
hugh sums of dollars offshore. The estimate given by members of
the U.S. House of Representatives and Senate who deal with the
committee who write the tax laws of the United States, said that
last year alone about $460 billion dollars went offshore.
MR. THWAITES has talked to a lot of practitioners throughout the
country and so far he has not found anyone who doesn't have three
to ten clients who would instantly want an Alaska family trust.
The dollar sums on the east coast are substantially larger than
ones in Alaska, which these are in the $50 to $80 million dollar
range. Mr. Thwaites pointed out that an allowance in the present
language should be made to include specifically the national
banking associations, such as National Bank of Alaska, First
National, etc. to ensure that they are also protected.
MR. THWAITES added that Bob Manley, of Hughes, Thorsness crafted
suggested language into the present draft of legislation before the
committee, which would specifically include the national banks and
also to provide more of a nexus to the state of Alaska. The place
of administration would be in the state of Alaska so that someone
couldn't necessary hire a straw man who would deal (indisc.). The
situs of the trust would be in Alaska, the administration of the
trust would be in Alaska. This would be a very attractive devise
just because of the rule against perpetuities and the fact that
this trust is an asset protection trust.
MR. THWAITES stressed additionally, the fact that Alaska lacks an
income tax makes it a really attractive devise alternative for
(indisc.) outside. The trust companies in Alaska would set a fee
schedule to administer these trusts and it is anticipated that this
number could substantially exceed that of the permanent fund in a
very short period of time. He also suspected that this devise
would make it's way into the trust publications throughout the
company very quickly. Mr. Thwaites also noted the high level of
interest from other states regarding the establishment of this
legislation.
MR. THWAITES summed up by stating that this legislation deals with
asset protection trusts. As an asset protection trust it does
shelter the assets according to the person creating the trust.
Under this legislation, the state of Alaska recognizes this concept
and protects this right.
Number 1010
REPRESENTATIVE GREEN made a motion to move to adopt version (M) of
CS HB 459 as the committee's working document. Hearing no
objection it was so moved. He went on to propose a hypothetical
situation to aid in understanding this legislation better.
Representative Green asked if it was possible that an individual
who owns a factory, to avoid litigation, sets up a trust with one
of their children along with an agreement to split the interest
made with an instrument such as proposed by this legislation. He
asked if this would be possible.
MR. THWAITES stated no, because Representative Green had indicated
that there was an agreement in conjunction to this trust. If there
was a verbal or written agreement to do so, this would negate the
terms of the trust. The child could at their discretion return the
interest to the settlor, but not at the command of the settlor.
Number 1030
REPRESENTATIVE GREEN asked how many states have a rule against
perpetuity.
MR. THWAITES believed that it was all but two, Idaho and Missouri.
He said there might be one other. He added that this rule of
perpetuity in and of itself is not sufficient to do what's proposed
in this present legislation. He used the example of South Dakota
creating the credit card rules to attract business to their state
and likened this trust law to this same concept. Alaska does not
presently have complex sets of trust laws which allows this
legislation to match nicely into it's present structure. This was
the problem in Missouri, they have too many other trust statutes
and the language drafted to allow asset protection trusts was
ambiguous. These two factors contributed to a low sense of
protection.
MR. THWAITES added that the rule against perpetuity would stay in
Alaska statute, but this trust concept would provide an exception
to this rule.
Number 1209
CHAIRMAN PORTER handed the leadership of this meeting over to Vice
Chairman Green since he was required to testify before the Senate
Judiciary committee about tort reform.
Number 1230
REPRESENTATIVE VEZEY asked Mr. Thwaites to clarify the difference
between the present committee substitute before them and the
legislation they had been working on as being found on page 3, line
25 (C) which dealt with national banking associations.
MR. THWAITES answered yes, lines 25 through 28 on page 3 and also
the clause dealing with the place of administration, located on
page 2, line 14. He went on to further clarify that these banking
institutions would be state banks headquartered in Alaska,
exercising trust powers and they would have their principal place
of business in Alaska. He noted that there are a number of state
banks who have chosen not to exercise trust powers. They would
need to apply to the regulatory powers to do so.
REPRESENTATIVE VEZEY noted that under the section located on page
3, line 25 that a state bank under Alaska statutes or an Alaskan
bank chartered under the National Banking Association federal laws
can utilize these trust laws, not a bank from New York for example,
who is not registered here in the state of Alaska.
Number 1453
REPRESENTATIVE BUNDE asked Mr. Thwaites to give an estimate of how
this legislation would impact the state of Alaska, how many jobs,
how much money the state would realize, etc.
MR. THWAITES offered that he was could not accurately project these
numbers, but did note in Alaska Business Monthly that the total
assets of the Alaska banks combined is $5 billion. When discussing
this concept with a banker in Great Falls, Montana this banker
estimated that they could see in a very short time an estimated
$200 billion in Alaska from formulating these trusts. Mr. Thwaites
projected that there would be an increase in trust departments to
handle this business which would create revenue.
MR. THWAITES also offered that because the United States has the
full faith and credit of the military, even people outside of the
United States might come to Alaska to do business. The potential
is virtually unlimited.
Number 1570
REPRESENTATIVE BUNDE then asked if the trust capital in Alaska
would be brought to bear on Alaskan projects as well.
MR. THWAITES said there would probably be some spin-off, but not
that great.
REPRESENTATIVE BUNDE asked how if an income tax did goes through in
Alaska, would this affect the influx of trust business.
MR. THWAITES thought that if this legislation came on line before
income tax goes into effect, then the perpetuity feature, the
credit shelter protection, and the security of the military would
still be desirable features in and of themselves. He also pointed
out that the income tax proposed in Alaska would not rival the tax
now levied in the state of New York, for example.
Number 1630
REPRESENTATIVE VEZEY made the argument that any tax to be discussed
would be a personal income tax, which in no way would affect the
corpus of the trust or the earnings until they were distributed.
MR. THWAITES said that this would not be the case. This type of
trust would be deemed a grantor trust, meaning, as the income is
earned, federal tax would have to be paid on this money. Because
the federal government would be required to pay taxes, the state of
Alaska would receive the other tax. Mr. Thwaites raised an
additional issue, that after passage of this legislation, the IRS
would need to pass a private letter ruling on this type of trust.
He noted that a firm in New York was ready and willing to pursue
this procedure at their expense if this legislation passed.
MR. THWAITES offered that the current law would not tax the trust.
Whatever fees were raised under the administration of a trust would
be subject to any tax a bank would have to pay, if these banks are
in fact required to pay these taxes as noted.
Number 1734
REPRESENTATIVE CYNTHIA TOOHEY asked about those banks such as the
Key Bank with corporate offices in Seattle, would they be allowed
to administer trusts under this legislation.
MR. THWAITES responded that not the Seattle version of Key Bank,
but the Key Bank of Alaska would be able to. Other banks such as
Chase Manhattan or the Bank of Tokyo could come to Alaska and apply
to open an Alaskan bank and perhaps form a holding company. These
banks would be subject to a lot of regulatory processes, at least
the way the law is presently structured.
Number 1796
REPRESENTATIVE FINKELSTEIN asked what these trusts were subject to.
What can be used to get at these trusts, say for example, a
criminal proceeding, something which comes out of a divorce
proceeding. He asked what superseded the nature of the limits of
this trust.
MR. THWAITES offered that the fraudulent transfer statute would
supersede these trusts, in other words, any asset going into the
trust would have to be free of any claim. For example, if
Representative Finkelstein gave some property to Mr. Thwaites
trust, Representative Finkelstein would have no claim back against
this property, except by virtue of what these assets were. If this
property was free and clear of any claims, none of Representative
Finkelstein's creditors could claim this property as long as it was
given without a fraudulent transfer and there were no liens or
encumbrances against it.
MR. THWAITES also made an important clarification about the
invasion of creditors. If the trustee chose to pledge or
collateralize assets of the trust against one of the beneficiary's
bank loans, this bank would then be able to foreclose against those
(indisc.) assets in satisfaction of a defaulted loan. The
individual and the trustee have to make an affirmative decision and
the bank has to make an affirmative decision that it won't loan the
money without requiring this collateral, so everybody is in an
equal bargaining position. Basically the way the trust is set up,
the creditors of the person who set up this trust wouldn't have any
rights to it.
Number 1895
REPRESENTATIVE FINKELSTEIN stated that assuming there's no issue of
collateral, he asked if there were any legal proceeding which would
give a party access to this trust, for instance, a conviction of
various crimes, restitution for these crimes, or ill gotten money.
MR. THWAITES stated that ill gotten money wouldn't be eligible.
The trust could be penetrated for this at any time. The money has
to be clean, there has to be no intent to convey for fraudulent
purposes, say to avoid a crime or restitution order, this would not
be allowable. If a situation happened fairly contemporaneous with
the establishment of the trust, there would be probably be a
presumption that this trust was set up for this reason and the
invaders could probably free the assets.
REPRESENTATIVE FINKELSTEIN asked about a divorce proceeding where
someone set up in advance a trust, would these assets be
inaccessible to these court proceedings regarding the division of
marital assets.
MR. THWAITES responded that maybe yes, maybe no. If the spouse has
a claim or an interest in the corpus of the trust, then it's
probably invadable. Alaska has different divorce laws. The courts
presume marital property under a similar concept of community
property. The mere fact that someone is married, without a
prenuptial agreement, then it's presumed that this trust is co-
owned by both spouses. A divorce would undoubtedly split the trust
into two parts. He said this would be true even in a third party
situation. If a spouse had a claim against assets assigned to a
trust, depending on the nature of the claim, the spouse would not
be precluded from obtaining this interest.
Number 2010
REPRESENTATIVE FINKELSTEIN stated he didn't understand what made
this particular trust irrevocable, especially because it's subject
to all of these proceedings. He wondered why more states did not
pass such legislation if it was such a good deal.
MR. THWAITES answered that most of the trust law in the other
states is based on an evolution of this change. Most other states
have income tax and they aren't choosing to allow this severance to
take place. What makes it irrevocable is that if someone has free
and clear property and they choose to sever their interest in this
property they can place into this trust of which they could still
be a class of beneficiary. This is clearly one of the benefits a
person would have, although they wouldn't have any control over the
trust as to where it goes and what happens to it under this
statute. Mr. Thwaites stated that he didn't understand why other
states haven't incorporated these trusts, unless it's just that
there's a competing interest back and forth between various parties
not to do this. He cited the problem with Missouri's trust
legislation again and spoke about other states which have made
varying attempts to incorporate this type of legislation.
Number 2095
REPRESENTATIVE BUNDE asked Mr. Thwaites to elaborate on the
involvement of the IRS and the firm which had offered to undertake
at their expense the necessary the procedures required of the IRS.
MR. THWAITES stated that for an investor to set up one of these
asset protection trusts they would want some assurance from the IRS
that this trust was legitimate. He went on to add that they
crafted this legislation to meet the IRS requirements thus far, but
he believed the IRS would issue a private letter ruling confirming
that this is a grantor trust. What this letter does is confirms
that the income from this trust would automatically pass through
and be taxed to the beneficiaries as an individual. One of the
benefits of this, is that presently, the tax rate for a trust is
39.6 percent for anything over $7500 a year. A grantor trust is
taxed at the individual rate. It is a nice package to be able to
hand over to an investor that this trust is approved by the state
of Alaska, it's approved by the trust company, as well as, the IRS.
Number 2165
REPRESENTATIVE VEZEY asked if the majority of the state's do have
an income tax.
MR. THWAITES stated that Nevada does not and South Dakota repealed
it in favor of a lottery. Their Supreme Court set this aside and
they may go back to an income tax.
REPRESENTATIVE VEZEY then asked if a beneficiary acquires assets
from an estate, would a trust prevent the state from taxing these
assets again.
MR. THWAITES stated that these assets would be taxed again. A
grantor trust provides for taxes attributable to the estate of the
decedent. He added that there's a generation skipping transfer
tax. This transfer tax would undoubtedly be applied to an asset
protection trust. This is why they would want a private letter
ruling to see how the IRS would handle this type of trust.
Arguably in the Cook Islands, many people avoid both the income tax
and the estate tax by just not paying it or declaring it. The
private letter ruling would clear up the issues of how the IRS will
deal with this trust taxability wise. The intent is not to shelter
it from taxes, but to provide in essence, a protection for the
assets which a family can receive much the same way a corporation
does or a limited liability company has done for partnerships and
such.
MR. THWAITES add that he believed not only would the income of the
trust be taxed, but also the entire value of the trust when it is
transferred. He noted as an example, irrevocable trusts to third
parties, such as to children. There is a gift tax which is the
same as the estate tax, that is assessed at the time of the gift
goes into the trust. This tax is already paid up front or the
deduction is given credit up front. There is a limit of a one time
transfer of $600,000 to a trust, tax free. Anything above this
would be subject to tax of 39 percent. This money would not be
subject to an estate tax until this child passed the trust onto
someone else. He also noted the example of a trust with a life
estate remainder to the next generation, this trust would be
subject to the $1 million generation skipping transfer. This $1
million transfer could go to a grandchild with a child in-between
without paying a tax.
Number 2360
BOB MANLEY, ESQ., testified by teleconference from Anchorage in
support of HB 459 as a private individual. He stated that HB 459
would promote local financial institutions and provide additional
job opportunities. It would increase the corporate income tax
base, because the banks will make more money and hence there will
be greater tax revenues into the state of Alaska. This will be a
way to keep this type of money in the United States rather than it
being diverted to foreign shores.
BOB MANLEY also noted that this legislation could turn Alaska into
a magnet for this type of capitol. The proposed amendments in the
working draft are important to make this concept work and that
Alaska is ensured some benefits from this type of opportunity.
TAPE 96-17, SIDE B
Number 040
BRIAN BRUNDIN, ESQ, CPA, testified by teleconference from Anchorage
in support of HB 459 as a private citizen. He noted that he had
been conducting estate planning for the last 29 years. This
legislation would help Alaskan's further protect their property.
Number 144
REPRESENTATIVE FINKELSTEIN asked for any help Mr. Brundin could
give about a potential downside to this type of trust, in other
words, hiding assets which would be counter to the public interest.
MR. BRUNDIN noted that there is a potential that anyone can misuse
anything. He noted that people come to him now and request things
that might be legally possible, but he doesn't do them. He added
that he didn't think there was an advantage to be gained to someone
trying to get around certain situations. In an irrevocable trust
a person has to relinquish control of their funds. These have to
be funds they can afford to let go of.
REPRESENTATIVE FINKELSTEIN cited a drug dealer, where under the
circumstances it can't be proven that the money was ill-gotten.
He asked if there would there be some advantage gained by these
individuals if the legislature passed this bill.
MR. BRUNDIN answered that he didn't see it.
Number 324
REPRESENTATIVE VEZEY pointed out that this type of trust especially
protects assets against an irresponsible beneficiary. This type of
trust helps protect assets for multiple generations.
REPRESENTATIVE BUNDE added that this trust also provided an
opportunity to trade control of money for a guarantee of it's
sanctity.
Number 411
REPRESENTATIVE FINKELSTEIN stated that he still had a sense that
there is another side to this issue. With the limited witnesses,
he said it was hard to determine what this other side was. He
asked if someone from the administration would be testifying. He
went on to use the example of bankruptcy in lieu of setting up this
type of trust. He wondered if someone could knowingly set up one
of these trusts as a way to avoid creditors.
CHAIRMAN PORTER reminded Representative Finkelstein of the
legislation they dealt with last session regarding the Uniform
Fraudulent Transfers Act, regarding these types of issues. One of
the disagreements related to this legislation was whether it should
be considered a fraudulent transfer when someone puts money into a
trust and an obligation was incurred after this deposit. It was
generally agreed that no, it shouldn't. If someone puts this money
into a trust for the stated purpose of the trust, some future event
should not allow this person to be penalized. The same thing
applies here. In the instance of drug money, the proof required
should be whether the money is tainted, not the strength of the
trust.
Number 555
REPRESENTATIVE FINKELSTEIN again used the example of someone in a
high risk business venture who gets out from under their
obligations by setting up a trust such as the one outlined. This
issue is very complex and he was convinced that there was still a
downside to this legislation.
Number 592
REPRESENTATIVE TOOHEY stated that she chose not to believe that
every trust transaction is between a bank and a drug dealer. There
are people out there who are making legitimate, good, honest money
that want the security of a trust like this.
REPRESENTATIVE FINKELSTEIN noted that in order to figure out how
something can be misused, someone needs to look at the worse case
scenario. He stated that they didn't want to set up a situation
for people trying to avoid proper responsibility.
CHAIRMAN PORTER stated that proper notice had been given on this
legislation in order for individuals to testify, including the
respective state departments.
Number 645
REPRESENTATIVE FINKELSTEIN also noted the lack of a fiscal note
from the Department of Commerce. He noticed that there was one
from the Department of Law though.
REPRESENTATIVE VEZEY responded that the request for a fiscal note
was transmitted to the legislative liaison and governor in
accordance with the practices established by the government.
Number 674
REPRESENTATIVE FINKELSTEIN said that they do require fiscal notes
from the affected agency regardless of a procedure breakdown.
CHAIRMAN PORTER added that the Department of Administration decides
which agencies are affected by a particular bill.
REPRESENTATIVE FINKELSTEIN asked what department deals with Section
13.
MR. THWAITES stated that the probate code, trusts and estates, etc.
is handled by the Department of Law and legislation which affects
banks, etc. comes under the jurisdiction of the Department of
Commerce.
Number 755
REPRESENTATIVE FINKELSTEIN offered an amendment to this legislation
to insert the word "majority" instead of "some or all" on page 2,
line 11 and page 3, line 1. He stated it seemed that if only one
percent is required that it's a sham. There should be some sort of
minimum in the inclusion of assets in Alaska.
REPRESENTATIVE VEZEY commented that this would be counterproductive
to the intent of the bill. He noted that they were not here to act
as financial advisors as to where these funds should be invested.
Number 820
MR. THWAITES added that there was a reason behind using the phrase
"some or all" because there are families that have rather large
estates including large office buildings, etc. Since this real
estate for example, could not be moved to Alaska and since real
estate is a potential asset, hence the phrase "some or all" was
crafted. This is why they allowed for the major administration of
these trusts be required in the state of Alaska, meaning for the
purposes of fees, any asset, including real estate would be used to
compute the fees an Alaska trustee would receive.
Number 955
REPRESENTATIVE FINKELSTEIN withdrew his amendment.
Number 1021
REPRESENTATIVE VEZEY made a motion to move CSHB 459(JUD) from the
House Judiciary Committee with individual recommendations and
fiscal notes as attached. Hearing no objections it was so moved.
REPRESENTATIVE FINKELSTEIN noted for the record that he clearly has
the least experience with this legislation and the least confidence
in understanding what they are doing with it. He said he would
attempt to further understand this legislation as it proceeds.
HB 293 - USE OF FORCE DEFENDING PERSON OR PROPERTY
Number 1030
REPRESENTATIVE VEZEY introduced HB 293 as sponsor. He noted it was
heard last year and stated that the purpose of this bill is to re-
establish the principle that a person's home is their castle. They
should have a right to feel safe and secure in their own home.
This legislation greatly relaxes the burden of proof for someone to
use deadly force to defend themselves in their home. It puts the
burden of proof on the person who receives this deadly force to
prove they were not indeed breaking the law or that they were not
justifiably inflicted with the deadly force.
Number 1070
CHAIRMAN PORTER noted that this legislation was brought back from
a subcommittee, since this sub-committee was not able to meet. It
was brought back for consideration to get the public testimony
completed. He then introduced Lieutenant Chris Stockard to
testify.
Number 1100
LIEUTENANT CHRIS STOCKARD, Department of Public Safety, testified
against HB 293. The department doesn't see a pressing need a
change to the present law regarding the use of force in defense of
persons or property. The present law provides adequate opportunity
for a person who is potentially subject to serious harm, or within
their own home, to use deadly force to defend themselves.
Number 1140
REPRESENTATIVE BUNDE asked if other means would need to be
exhausted before the use of deadly force was initiated. He
wondered about a hypothetical homeowner, under possible sanctions
of the law, who decided not to run but, shot first instead.
LT. STOCKARD, stated he wasn't an attorney and wouldn't give legal
advise, but explained the situation from the perspective of how a
working police officer would view these provisions of law. AS
11.81.335 says that a person can use deadly force when they
reasonably believe the use of deadly force is necessary for self-
defense against death, serious physical injury, kidnapping, sexual
assault in the first degree, sexual assault in the second degree,
or robbery in any degree. It goes on further to establish that
there is a duty to retreat rather than use deadly force, except
when the person is within their own home, or premises which they
own or lease. This duty of retreat has to been done with complete
safety, not when the person thinks they can get away, but when they
know for certain that they can get away successfully.
LT. STOCKARD noted that current law clearly says a person is not
required to exercise the option of using deadly force unless there
is no other alternative. The state of Alaska doesn't feel they
should encourage the use of deadly force to solve cases involving
simple assault. The list of crimes to use self-dense for deadly
force are serious crimes against a person. The bill as proposed
would reduce this criteria to assault in any degree. The
department has not seen any evidence that the current standards of
discouraging people from using deadly force, except when there is
no other alternative, has created a problem for the citizens. This
is why the department opposes these changes.
Number 1312
REPRESENTATIVE GREEN voiced his concerns about the standard of
reasonableness when applied to these types of deadly force
situations. It seemed to him that everyone present would represent
a different perspective and attitude regarding an identical
situation.
LT. STOCKARD did not disagree with this. The current law calls for
the standard of a reasonable belief that a person is in danger of
any offense as outlined. He noted the example of a paranoid,
delusional person who thinks they are going to be kidnapped. It
might be found that using deadly force in this situation was not
justified. On the other hand, someone may break into a house in
the middle of the night. Under current law he didn't think there
would be any liability attached to the home owner if they used
deadly force in this situation. Lt. Stockard then used a personal
illustration to make his point.
Number 1496
REPRESENTATIVE FINKELSTEIN asked if Lt. Stockard in his experience
had ever seen a case where he felt the interests of justice wasn't
served by the prosecution of someone for the defense of home. Have
there been cases where he thought there...
LT. STOCKARD stated that he did not know of any case where an
injustice might have happened and he said he could honestly say
that he was not aware of any in the state of Alaska where this has
been the case. He said that deadly force should be carried out as
the last resort.
REPRESENTATIVE FINKELSTEIN noted for the record, that last year
some of these same questions came up and then, as well as now,
there were no examples of miscarriages of justice which had
resulted from the existing law.
BERNARD GOODNO, testified in opposition of HB 293 since the
constitution of the United States reaffirms his right of self
defense. "God gave me the right." He said he resented the
legislature wanting to take this right away in order to make it a
state privilege. He resents this. Mr. Goodno also noted it was
time the Alaska Legislature stopped being a puppet to the corporate
and federal government. He also pointed out that they were elected
to uphold the federal and Alaska constitutions.
GENE OTTENSTROER, testified in opposition of HB 293 as a sovereign
citizen. He noted that Article 9 of the U.S. Constitution already
gives them the right to protect their property, as well as, Article
1, section 1 of the Alaska Constitution.
Number 1836
REPRESENTATIVE FINKELSTEIN made a motion to move amendment number
1.
REPRESENTATIVE Toohey objected. She stated that she was
comfortable with the way the bill presently read. Representative
Vezey also opposed the amendment.
REPRESENTATIVE Finkelstein pointed out this amendment would leave
in place the concept of defense of dwelling in Section 2, but would
take out the concept of acting in self-defense against threat of
criminal assaults, more specifically he proposed to delete on page
1, lines 3 to 13.
CHAIRMAN PORTER requested a roll call vote. Representatives Bunde,
Finkelstein and Porter voted in favor of amendment number 1.
Representatives Toohey, Vezey and Green voted against amendment
number 1. Amendment number 1 failed.
Number 2075
REPRESENTATIVE FINKELSTEIN made a motion to move amendment number
2 regarding the involved standard. He noted that just because
someone might act in self-defense, this does not address intent at
all. More specifically this amendment attempts to delete on page
1, lines 8 to 9 and to insert the following, "reasonably believes
the use of deadly force is necessary for self-dense against death,
serious physical injury, kidnapping, sexual assault in the first
degree, sexual assault in the second degree, or robbery in any
degree."
REPRESENTATIVE VEZEY objected to amendment number 2.
CHAIRMAN PORTER requested a roll call vote. Representatives Toohey
and Vezey voted against amendment number 2. Representatives
Finkelstein, Green, Bunde and Porter voted in favor of amendment
number 2. Amendment number 2 passed.
Number 2156
REPRESENTATIVE FINKELSTEIN withdrew amendment number 3 and made a
motion to move amendment number 4. This amendment responded to the
testimony from the Department of Public Safety, regarding whether
someone reasonably believes a crime has been committed and
reasonably believe physical force is necessary. More specifically
this amendment attempts to delete on page 1, line 8 and to insert
the following, "reasonably believes the use of deadly force is
necessary for self-defense against."
REPRESENTATIVE GREEN objected to amendment number 4.
Representative Green pointed out that when someone is in their home
and another person has violated these premises he felt as though
the home owner has the right to take whatever action is necessary.
This intruder should not be on the premises under any
circumstances.
REPRESENTATIVE BUNDE made the point that maybe there was a legal
connotation behind the word reasonable which they were not taking
into affect. Using Representative Green's example he thought it
would reasonable to believe that this intruder was a threat and he
would have the right to defend himself.
CHAIRMAN PORTER believed a degree of reasonableness would be
required in this interpretation in the first place. Representative
Vezey added that the word reasonable is considered to be the most
litigated word in the English language.
Number 2486
ANNE CARPENETI, Department of Law, testified that "reasonable under
the circumstances" is how this is usually interpreted.
TAPE 96-18, SIDE A
Number 000
MS. CARPENETI stated that the committee should use the words
"reasonable person" in the statute if this is the standard they
want.
REPRESENTATIVE GREEN asked what would happen if this phrase wasn't
inserted, would it essentially mean the right to "blast."
MS. CARPENETI said this was one of the reasons why the Department
of Law strongly opposes this bill, that the phrase "reasonable
person" as a standard is not included in this section.
Number 068
REPRESENTATIVE FINKELSTEIN pointed out that the word reasonable
helps to define reasonable under the circumstances. The lack of
the word reasonable doesn't require that the person using deadly
force should do so reasonably. He used the example of an eight
year old getting into a house unannounced. Representative
Finkelstein also noted that the phrase "no matter how slight" is
also proposed as part of this legislation.
CHAIRMAN PORTER requested a roll call vote on amendment number 4.
Representative Vezey voted against amendment number 4.
Representatives Finkelstein, Green, Bunde, Toohey and Porter voted
in favor of amendment number 4. Amendment number 4 passed.
Number 320
REPRESENTATIVE FINKELSTEIN asked that they rescind their action on
amendment 1 since it didn't make sense as he initially phrased it.
He stated that the committee had taken a step to fix the second
part of this legislation by adopting amendment number 4. The
problem still exists in the expansion of the crimes covered under
the section which amendment number 1 adressed, including the
example of custodial interference as presented earlier. Based on
this, he thought it would be the best solution to eliminate this
section and get back to the issue of defense of personal properties
in someone's home.
CHAIRMAN PORTER requested a roll call vote to rescind the action
taken on amendment number 1. Representative Finkelstein voted in
favor of this recision. Representatives Green, Bunde, Toohey,
Vezey and Porter voted against the recision. The recision on
amendment number 1 failed.
Number 477
REPRESENTATIVE BUNDE made a motion to move HB 293 as amended, with
attached fiscal notes and individual recommendations.
Representative Finkelstein objected.
CHAIRMAN PORTER requested a roll call vote. Representative
Finkelstein voted against the motion to move HB 293.
Representatives Green, bunde, Toohey, Vezey, and Porter voted in
favor of the motion to move HB 293. HB 293 was moved from the
Judiciary Committee.
ADJOURNMENT
CHAIRMAN PORTER adjourned the meeting at 3:00 p.m.
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