HB 201 - UNIFORM ACT: PROPERTY INTEREST DISCLAIMER 2:10:51 PM CHAIR RAMRAS announced that the final order of business would be HOUSE BILL NO. 201, "An Act relating to the Uniform Disclaimer of Property Interests Act, to the disclaimer of property rights under the Uniform Probate Code, and to child support; and providing for an effective date." [Included in members' packets was a proposed committee substitute (CS) for HB 201, Version 25- LS0615\E, Bannister, 3/31/07.] 2:10:57 PM REPRESENTATIVE GABRIELLE LeDOUX, Alaska State Legislature, sponsor, said that HB 201 would enact the Uniform Disclaimer of Property Interests Act, and that her staff would be presenting the bill. 2:11:34 PM SONYA HYMER, Staff to Representative Gabrielle LeDoux, Alaska State Legislature, relayed on behalf of the sponsor, Representative LeDoux, that HB 201 would enact the Uniform Disclaimer of Property Interests Act, which has been approved by the American Bar Association and enacted in 13 other [jurisdictions] to date, and that Representative LeDoux agreed to sponsor the bill at the request of the National Conference of Commissioners on Uniform State Laws (NCCUSL). Remarking that a disclaimer extinguishes an interest as if it never existed, Ms. Hymer explained that HB 201 sets up a clear procedure by which beneficiaries of interests received via inheritance, will, or trust can disclaim those interests as if they had never existed. For example, if a person leaves the family farm to his three adult children, but two of them don't live on the farm anymore and want to leave their interests in the farm to the third adult child who is still living and working on the farm, the two children could disclaim their interests and thereby leave the farm in its entirety to the third child. MS. HYMER said that the NCCUSL drafted the original version of the bill, and that members' packets include a sectional analysis written by the NCCUSL. In response to a question, she offered her understanding that once someone accepts the property, it cannot then be disclaimed. 2:14:09 PM MARY ELLEN BEARDSLEY, Assistant Attorney General, Commercial/Fair Business Section, Civil Division (Anchorage), Department of Law (DOL), added that if all beneficiaries submit a disclaimer, the property could ultimately escheat to the state, though such rarely happens. 2:15:30 PM REPRESENTATIVE COGHILL moved to adopt the proposed committee substitute (CS) for HB 201, Version 25-LS0615\E, Bannister, 3/31/07, as the work draft. REPRESENTATIVE GRUENBERG objected for the purpose of discussion. MS. HYMER explained that the original bill contained a transitional provision that was meant to address the bill's proposed repeal of the existing disclaimer law - AS 13.12.801. However, that transitional provision was later found to be unnecessary - because the proposed repeal is addressed in the NCCUSL's official comments regarding this proposed uniform Act - and so it was removed from Version E. REPRESENTATIVE GRUENBERG opined that requiring someone to look at a uniform Act's "comments" in order to determine a transitional effect sets a dangerous precedent. MS. BEARDSLEY explained that initially the drafter felt there was a need for the transitional provision but was then persuaded otherwise. She referred to the language on page 8, lines 23-27 - proposed AS 13.70.140, which pertains to "Application to existing relationships" - and said that the DOL's interpretation was that "that actually deals with this issue, and that the transition language in Section 3 [of the original bill] was basically redundant and unnecessary." Therefore, Version E no longer contains that transitional provision. REPRESENTATIVE GRUENBERG removed his objection. CHAIR RAMRAS announced that Version E was before the committee. REPRESENTATIVE GRUENBERG referred to proposed Article 2 [which bars a disclaimer by anyone in arrears in child support payments or involved in a proceeding to establish or modify a child support obligation], and suggested that the committee include spousal support in that provision. He offered his understanding that the Child Support Services Division (CSSD) has jurisdiction over spousal support, and relayed that he would be offering a possible amendment to add spousal support. 2:19:28 PM LYNN E. LEVENGOOD, Commissioner, National Conference of Commissioners on Uniform State Laws (NCCUSL), explained that although the proposed uniform Act has been adopted in 13 other jurisdictions, Version E of HB 201 was drafted by the administration and has been approved as written by the NCCUSL. Version E contains language that is very, very close to the language in the uniform Act, and contains Alaska-specific provisions to which Ms. Beardsley can speak. Mr. Levengood said he is the point of contact for the NCCUSL on this legislation, adding that should members have any specific technical questions regarding the language, he would have to take those issues back to the NCCUSL to get a detailed response. REPRESENTATIVE GRUENBERG offered his understanding that an amendment to change proposed Article 2 as he's suggested would not affect the language of the uniform Act. He suggested also that the title be narrowed such that it read in part, "and to disclaimers relating to child and spousal support". He then asked whether the language on page 10, lines 9-10, would also apply if there is "no child support proceeding pending to a potential paternity action." He said he wants to be sure that one couldn't file a disclaimer just to avoid being named in a paternity suit. MS. BEARDSLEY indicated that the language in Article 2 was drafted by the DOL in consultation with the CSSD, adding that the primary concern of the CSSD pertained to child support and [so] spousal support was not addressed. She ventured, however, that whether the language in Article 2 applies would depend on whether an action regarding paternity has been initiated and whether a child support determination has been made. She said she would research that issue further and provide an answer to the committee. REPRESENTATIVE GRUENBERG said he could envision people in pending divorces using the disclaimer provided for via HB 201 as part of their divorce plan just to get out of possibly having to pay child support. 2:27:00 PM DAVID G. SHAFTEL, Attorney at Law, explained that these disclaimers are very central to trust and estate law, adding, "We're dealing with assets that a person inherits, not assets that they already own." Therefore if one's father dies and leaves one $10,000, one can disclaim that $10,000 - but for federal tax purposes it has to be disclaimed within nine months - and then it would be as if one had died before his/her father. Again, such disclaimers are very central and important in estate and trust administration, and they are used all the time. He went on to express a concern that he and the other members of the informal group of attorneys who've been working on trust and estate legislation since 1997 have not yet had a chance to review the proposed uniform law; he asked that the members of this informal group be given a chance to review the proposed uniform law in order to ensure that it contains advantageous provisions for Alaska and that those provisions are consistent with existing law. CHAIR RAMRAS asked how much time such a review would require. MR. SHAFTEL suggested that it could take a great deal of time, offered his belief that current law is sufficient for the time being, and opined that it would be wise to research the proposed uniform law further. REPRESENTATIVE LeDOUX offered her understanding, however, that Deborah Behr from the Department of Law has already vetted the bill with numerous members of the estate bar. MR. LEVENGOOD, in response to a question, said that the language from the NCCUSL was provided to estate attorneys in December 2006, and that HB 201 was then provided to them in March 2007. Mr. Levengood mentioned that the only person to provide him with feedback was Mr. Shaftel and that feedback was provided only yesterday. 2:32:56 PM STEPHEN E. GREER, Attorney at Law, said he is very active in the estate planning section of the Alaska Bar Association (ABA) and attends their meetings regularly, and he's not seen this language come up as a topic of discussion. Passage of HB 201, he opined, will create a plethora of lawsuits because the nine- month period is being eliminated. He too recommended that he and the other members of the aforementioned informal group of attorneys be allowed to review the proposed uniform law more thoroughly. RICHARD S. THWAITES, JR., Attorney at Law, added that he likewise had not had an opportunity to consider this bill until this morning. He mentioned that he has been active in the estate planning community as an attorney and as chair of the estate planning section and the elder law section [of the ABA], and that he actively uses disclaimer provisions in all of the estate planning he does. Furthermore, he remarked, he has played an active role in the promulgation of Alaska's current trust law. In conclusion, Mr. Thwaites said he concurs with Mr. Shaftel. REPRESENTATIVE COGHILL suggested that the committee look at the similarities and dissimilarities between the proposed uniform law and those that have been adopted in the 13 other jurisdictions, perhaps via a side-by-side comparison. REPRESENTATIVE GRUENBERG said he wants the opportunity to research Article 2 of the bill further. REPRESENTATIVE LeDOUX said she wants to ensure that everyone's concerns are addressed before the legislation is moved from committee. 2:36:32 PM DEBORAH BEHR, Chief Assistant Attorney General, Legislation & Regulations Section, Civil Division (Juneau), Department of Law (DOL); Commissioner, National Conference of Commissioners on Uniform State Laws (NCCUSL), characterized Representative Gruenberg's ideas as good ones, and said she would be happy to assist in the development of appropriate language. She also mentioned that Mr. Levengood did send out letters to individuals in the "trust community" informing them of the bill, and that she herself had called individuals but received no response and so she'd assumed that there were no problems with the bill. She surmised that if there are problems with the bill, then the proponents of the proposed uniform law will want to address them so as to have a law that works for the state. MR. SHAFTEL, in response to the question of how long a further review of the bill might take, suggested that in addition to the issues that have arisen today, other issues might arise as well that would be of concern. He remarked that none of the trust and estate law practitioners that have repeatedly come before the legislature with suggestions for changes to current law over the last 10 years appear to have been notified about the proposed uniform law at an early date, adding that he doesn't see any urgency to move the bill since existing law will suffice until the bill is reviewed further. CHAIR RAMRAS asked Mr. Shaftel to put his concerns with the bill in writing so that the committee could review them. REPRESENTATIVE COGHILL suggested that the committee may also wish to consider the question of what types of lawsuits might be engendered by passage of the bill. CHAIR RAMRAS asked Mr. Greer to provide information on that issue in writing. [Following was a brief discussion on the possibility of having information brought to the committee regarding other uniform laws that the legislature might wish to consider.] [HB 201, Version E, was held over.]