SB 104-VEHICLES/BOATS: TRANSFER ON DEATH TITLE  1:48:44 PM CHAIR BJORKMAN reconvened the meeting 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." 1:49:10 PM SENATOR SCOTT KAWASAKI, District P, Alaska State Legislature, Juneau, Alaska, Sponsor of SB 104, introduced himself. 1:49:18 PM JENNA COLQUHOUN, Staff, Senator Scott Kawasaki, Alaska State Legislature, Juneau, Alaska, introduced herself. 1:49:22 PM SENATOR KAWASAKI paraphrased from the sponsor statement for SB 104: [Original punctuation provided.] Senate Bill 104  Sponsor Statement  "An act relating to the transfer of a title on the death of the owner; and providing for an effective date." The death of a family member is a difficult experience for any person. It is an emotional process we all have or will face that drains an individual's stamina and motivation. Add to that the legal complications and costs this familial absence inflicts on a household, it is no wonder that a death in the family is one of the most stressful events in a person life. Going through the probate process can cost a family thousands, potentially tens of thousands of dollars in legal and filing fees at a time when an individual is less able to cope with such financial pressure. SB 104 would provide an option for Alaskans to alleviate such pressures when a loved one passes. SB 104 aims to continue the work of the Uniform Real Property Transfer on Death Act (URPTDA). This piece of legislation passed in 2014 with unanimous support from both the House and the Senate and created the Transfer on Death (TOD) deed, which allows for nonprobate transfers of real property. TOD deeds allow Alaskans to select a beneficiary who will receive the property at their passing and removes that property from the process of probate which can take anywhere from 6 months to several years to complete. At this time, a TOD deed cannot be issued for boats and other vehicles for which the DMV issues titles. SB 104 would ameliorate this situation. This piece of legislation would continue the ongoing effort to reduce costs and stress of probate for Alaskans by creating a streamlined service through the DMV through which any Alaskan can designate beneficiaries for both vehicles and boats by filling out a simple form. With this TOD deed, an Alaskan would be able to gain access to a vehicle or boat much faster than if they had to go through the probate process. This may seem like a moot point but consider a situation where a family runs a fishing business from their family boat. That boat is a crucial part of the business and not being able to use it for even a month could lead to bankruptcy. SB 104 would be a ensure such a situation would not happen. The TOD titles will be available for all boats and vehicles for which the DMV provides titles, which also includes some mobile manufactured homes under AS.45.29.102(66). The program would be self-sustaining though the fees collected from the individuals who file for the TOD deeds. At no cost to the state, SB 104 will allow countless Alaskans to pass down boats, vehicles, and some manufactured homes to beneficiaries with more ease and will help simplify the potentially complicated, costly, lengthy, and painful process of probate following the death of a loved one. 1:51:57 PM SENATOR TOBIN noted her previous work experience helping individuals craft estate plans for charitable giving and commented that the transfer of assets is complicated in Alaska. She asked about potential associated costs, e.g. slip fees for boats, and whether these would transfer to the new owner. 1:52:40 PM MS. COLQUHOUN shared her understanding that all encumbrances and liens associated with a particular boat or vehicle would be transferred to the beneficiary with the transfer on death (TOD) title. 1:53:02 PM SENATOR KIEHL directed attention to page 3, line 17 of SB 104 and asked whether a beneficiary who disclaimed their interest in the boat or vehicle would be free from associated fees. 1:53:42 PM MS. COLQUHOUN shared her understanding that if the beneficiary disclaims the boat or vehicle, they would be free from any associated fees. 1:54:06 PM SENATOR SHOWER noted the difference between a will and a trust and asked whether trusts should be included. He wondered how SB 104 would change if trusts were included. He shared his understanding that trusts are simpler. 1:54:58 PM MS. COLQUHOUN deferred the question. 1:55:31 PM LINDA HULBERT, Agent, New York Life, Fairbanks, Alaska, said that she is not qualified to answer the question of whether trusts should be included. 1:56:47 PM SENATOR KIEHL directed attention to page 3, line 5 of SB 104, which states that a title obtained via TOD is effective without consideration. He shared his understanding that this means the person to whom the title is transferred is not required to pay. He asked if there is a problem with consideration of any kind while the owner is alive. He offered examples to illustrate his question. He asked if this would impact the efficacy of TOD. 1:57:46 PM MS. COLQUHOUN replied that "without consideration" means that the beneficiary does not need to be notified that they are the TOD beneficiary. She explained that the TOD title does not impact the owner's ability to make decisions related to the vehicle prior to their death. If the owner sells the boat or vehicle, the associated TOD title is void. 1:58:22 PM SENATOR KIEHL acknowledged that page 3, lines 2-3 states that the beneficiary does not need to be notified or to accept the TOD title to be effective. He directed attention to page 3, line 5 and reiterated his understanding that "consideration" refers to monetary consideration. He asked for clarification. 1:58:39 PM MS. COLQUHOUN clarified that, with respect to monetary consideration, the TOD beneficiary would not have to pay for the TOD deed. This responsibility lies with the TOD owner. If the owner sold the associated vehicle, the TOD beneficiary would not receive any of the monetary consideration. SENATOR KIEHL offered a hypothetical scenario to illustrate his question. He asked whether the phrase "without consideration" could potentially invalidate a TOD title due to a previous financial consideration. 1:59:42 PM MS. COLQUHOUN replied that she did not have the answer and said she would provide this information at a later time. 1:59:54 PM SENATOR SHOWER commented that the distinction of what occurs while the owner is alive versus after the owner's death relates to his earlier question of whether to include trusts in SB 104. He asked to consider this further when that question is addressed. 2:00:12 PM CHAIR BJORKMAN announced invited testimony on SB 104. 2:00:29 PM ABIGAIL O'CONNOR, Attorney, O'Connor Law LLC, Anchorage, Alaska, testified by invitation on SB 104. She expressed support for this legislation. She said that vehicles pose significant challenges for estates and offered examples to illustrate this. She stated that SB 104 provides a solution for those challenges. She emphasized that these changes would make Alaskans lives easier and reduce the stress that surviving family members experience after the death of a loved one. 2:03:23 PM MS. O'CONNOR turned her attention to questions. In response to a question related to beneficiary disclaiming the interest, she explained that a beneficiary can disclaim a gift. If this happens, the vehicle is passed on to the estate, as if the beneficiary had predeceased the car owner. With respect to a trust being treated as beneficiary, she explained that (as written) SB 104 would allow this. However, for liability purposes, she does not generally advise clients to place vehicle or boat titles in the name of their trust. With respect to consideration, she offered an example of someone buying a future interest to illustrate the question and opined that this would be highly unusual. She opined that it would be more likely for someone to pay the vehicle owner in order to become co-owner of the vehicle; in this case, the title would automatically transfer on death (without a TOD title). She said she does not believe the language related to consideration would cause any challenges. 2:06:43 PM SENATOR SHOWER wondered whether it would be better to define "trust." 2:07:46 PM LINDA HUBERT, Agent, New York Life Insurance Company, Fairbanks, Alaska, testified by invitation on SB 104. She gave a brief history of her work in the life insurance industry in Alaska. She emphasized that a TOD title is a revocable decision. She opined that a TOD title makes sense and would solve problems for many. She emphasized the importance of creating greater ease for those in remote locations. She emphasized the importance of estate planning, which she said can be a difficult process. She pointed out that vehicles and boats often place an estate into probate and SB 104 would avoid this. She reiterated that simplifying the process creates greater ease throughout this process and expressed her support of SB 104. 2:11:32 PM CHAIR BJORKMAN led a chorus of "Happy Birthday" for Senator Kawasaki. 2:12:03 PM CHAIR BJORKMAN held SB 104 in committee.