SB 104-VEHICLES/BOATS: TRANSFER ON DEATH TITLE  3:38:57 PM CHAIR KAWASAKI reconvened the meeting and announced the consideration of SENATE BILL NO. 104 "An Act relating to the transfer of a title on the death of the owner; and providing for an effective date." 3:39:28 PM JENNA COLQUHOUN, Staff, Senator Scott Kawasaki, Alaska State Legislature, Juneau, Alaska, introduced SB 104 on behalf of the sponsor and read the following quote from slide 1: [Original punctuation provided.] "An Act relating to the transfer of a title on the death of the owner; and providing for an effective date." 3:39:53 PM MS. COLQUHOUN moved to slide 2 and discussed the following: [Original punctuation provided.] Transfer on Death Deeds • Was created in Alaskan Statute when the "Uniform Real Property Transfer on Death Act" was passed in 2014 by the 28th Legislature -AS 13.48.010 "An individual may transfer property to one or more beneficiaries effective at the transferor's death by a transfer on death deed." • AS 13.48.020 "A transfer on death deed is no testamentary -Not involving or creating a will -Assets subject to a Transfer on Death (TOD) deed skip the probate process • TOD deeds currently can only be used for Real Property -Land and anything permanently attached to it 3:41:14 PM MS. COLQUHOUN moved to slide 3 and discussed the following: [Original punctuation provided.] What SB 104 Does  • Extends Transfer on Death (TOD) deed to boats, vehicles, and certain manufactured homes titled through the DMV -No more than two beneficiaries -Owner can revoke TOD deed or change the beneficiary at anytime without notice to the beneficiary -Designated beneficiary can disclaim their interest • Beneficiary of a TOD deed would be subject to conveyances, encumbrances, assignments, contracts, liens, and other interests to which the boat or vehicle • Establishes the procedure to obtain a TOD deed -Owner will fill out an application and submit a fee to the Department of Administration -These fees will serve to fund the program 3:43:15 PM MS. COLQUHOUN moved to slide 4 and discussed the following: [Original punctuation provided.] Benefits of SB 104  • Lowers the cost of probate for Alaskans -On average, it costs $14,225 to settle an estate* • Allows Alaskans without ready access to law services estate planning tools -Rural Alaska • Expedites beneficiary access to boats and vehicles -Enabling timely maintenance and preservation of boats and vehicles -In the instance of a family fishing business, allows the business to continue uninterrupted • Reduces probate case load 3:45:55 PM CHAIR KAWASAKI announced invited testimony on SB 104. 3:47:25 PM CHELSEA RIEKKOLA, Attorney, Foley and Pearson, Anchorage, Alaska, testified by invitation on SB 104 and emphasized that the bill improves access to justice. She noted that probate for smaller assetslike vehicles and boatsoften doesn't justify using public or court resources, and SB 104 would address the issue. 3:49:07 PM CHRISTOPHER WALKER, representing self, Faulkner Banfield, Juneau, Alaska, testified by invitation on SB 104 and said this is a common-sense measure that fills a gap in current law. He explained that Alaska lacks effective mechanisms to transfer certain assets, especially boats and vehicleswithout probate. He said existing tools like TOD deeds are limited because they don't fully avoid probate for these items. 3:51:29 PM ABIGAIL O'CONNOR, Chief Fiduciary Officer, Peak Trust Company, Anchorage, Alaska, testified by invitation on SB 104 and stated this is a practical solution for families when someone dies on a boat in Alaska. SB 104 addresses timing and insurance issues, easing significant challenges families face after a loved one's death. 3:52:24 PM SENATOR WIELECHOWSKI said noted Alaska does not have estate tax. He asked if the transfer of a boat or vehicle would count towards federal estate tax. 3:52:49 PM MS. O'CONNOR replied that vehicles are included in the gross estate for federal estate tax purposes and SB 104 does not change that. If the vehicle passes to a U.S. citizen spouse, no estate tax applies, however, if it goes to someone else, estate tax may be owed. 3:53:28 PM SENATOR WIELECHOWSKI asked whether creditors can collect against a boat or vehicle asset if the estate has liabilities and that asset is transferred. 3:54:03 PM MS. O'CONNOR requested confirmation that the question was talking about a general estate liability, not a lien on the vehicle. SENATOR WIELECHOWSKI answered yes. MS. O'CONNOR replied that SB 104 does not provide an exemption for vehicles and boats. She referenced SB 104, Section 3, page 3, lines 24-27,[AS 13.33.401 (j)], "...the state may enforce liability against a boat or vehicle transferred at the owner's death... 3:55:17 PM SENATOR WIELECHOWSKI asked if the deceased co-owned a boat, would the share be transferred upon death and how would it work if the new owner wanted to sell or not keep their share. 3:56:01 PM MS. O'CONNOR replied that without SB 104, a non-married co-owner of a boat could still transfer only their share at death. The beneficiary designation would apply only to that person's interest, and the title would still list both owners. She noted that SB 104 doesn't change that outcome, and in such cases, the transfer-on-death designation might not be used. 3:57:43 PM MR. WALKER replied that under [AS 13.33.401] (a), a TOD vehicle title only takes effect upon the death of the sole owner or the last surviving joint owner. It does not apply to just one co- owner's fractional interest. 3:58:13 PM SENATOR WIELECHOWSKI asked if he owned a boat with Senator Kawasaki, and died, would his daughter acquire the share. 3:58:31 PM MR. WALKER replied that his daughter would not acquire his share because the other owner, Senator Kawasaki is still living. SENATOR WIELECHOWSKI asked if Senator Kawasaki died would his daughter get the boat. MR. WALKER replied that it depends on how the boat is titled. He said unlike real property, vehicle titles can be listed as "and" or "or" between owners. An "or" title is usually interpreted to grant survivorship rights, meaning the vehicle passes to the surviving owner. However, under the language of SB 104, a transfer-on-death designation would not apply to just one owner's share. 4:00:31 PM LINDA HULBERT, Agent, New York Life Insurance, Fairbanks, Alaska, testified by invitation on SB 104 and stated that the bill helps everyday people transfer assets like boats or vehicles without probate, avoiding delays and allowing continued use for family or business. She said TOD titles make the process smoother, reduce court involvement, and are easy to revoke if needed. She emphasized a TOD is flexible, practical tool that simplifies estate planning and encourages more people to use it. 4:03:08 PM SENATOR WIELECHOWSKI asked if there is a liability, such as a mortgage or loan, on the boat or car, does the debt transfer to the beneficiary. 4:03:22 PM MS. HULBERT answered yes. She said beneficiaries can disclaim a boat or vehicle if they don't want it, whether for financial or personal reasons. She suggested attorneys clarify the legal details. 4:04:19 PM SENATOR WIELECHOWSKI asked if a boat or vehicle is transferred and later the estate is found to lack sufficient funds, is the recipient still responsible for the debt if they already sold or gave away the asset. 4:04:53 PM MS. RIEKKOLA answered that SB 104 mirrors the transfer-on-death deed process for handling creditors. Creditors have one year from the date of death to make claims. If someone accepts a vehicle through a transfer-on-death title, they also accept any liabilities attached, and if they later sell the asset, they remain responsible for those obligations. 4:06:48 PM CHAIR KAWASAKI asked how SB 104 applies when someone owns both a vehicle with a TOD title and a home used as a licensed assisted living facility, since the real property falls under a different statute. 4:07:41 PM MS. O'CONNOR replied that if a vehicle is titled to an individual, it can transfer to beneficiaries under SB 104, regardless of its use. Similarly, a house under a revocable TOD deed would pass to the named beneficiary. He noted that regulatory requirements may involve notifying the state about ownership changes, which is outside their expertise. She added that assisted living homes and related vehicles are often titled under an entity like an LLC, in which case this statute would not apply. 4:09:43 PM MS. RIEKKOLA clarified that SB 104 is meant to address simpler, lower-income situations, like transferring a car to children or a family fishing vessel, rather than complex business scenarios. She stated that businesses with significant liabilities, such as assisted living facilities, should be structured as LLCs with legal counsel. Overall, SB 104 effectively streamlines straightforward cases. 4:10:48 PM SENATOR WIELECHOWSKI questioned the accuracy of the statute referenced in SB 104, page 5, lines 2930, which cites AS 28.10.201 for vehicle titles. He suggested this may be incorrect and that AS 28.10.011 or another section might be the proper citation, urging a review of the reference. 4:11:39 PM MS. COLQUHOUN stated that, to her understanding, the section discusses vehicles that can be titled through the DMV. She said it was reviewed multiple times to clarify distinctions, such as between manufactured homes with and without foundations, however she is willing to reread it to confirm accuracy. 4:12:37 PM CHAIR KAWASAKI opened public testimony on SB 104; finding none; public testimony was kept open. 4:14:14 PM CHAIR KAWASAKI held SB 104 in committee.