HB 144 - UNIFORM PROBATE CODE; TRUSTS, WILLS  2:25:23 PM VICE CHAIR DAHLSTROM announced that the final order of business would be HOUSE BILL NO. 144, "An Act relating to the Uniform Probate Code, including wills, trusts, nonprobate transfers, augmented estates, personal representatives, and trustees; and amending Rules 3 and 8, Alaska Rules of Civil Procedure, Rule 1, Alaska Rules of Probate Procedure, and Rule 37.5, Alaska Rules of Administration." 2:25:57 PM JANE W. PIERSON, Staff, Representative Jay Ramras, Alaska State Legislature, explained on behalf of the sponsor, Representative Ramras, that HB 144 would update Alaska's trust laws, thereby enabling Alaska to maintain its frontrunner position as a premier location for trusts and estate planning. Specifically, HB 144 would add provisions allowing the settlor of a trust to designate a representative who can bind an incapacitated person in future proceedings related to trust administration - this would streamline the process and would not always require a guardian ad litem (GAL); and would establish that an augmented estate does not include property transferred to an irrevocable trust if the settlor is a discretionary beneficiary of the trust and the transfer was made more than 30 days before marriage or with the consent of the decedent's spouse - this is similar to Delaware law. An augmented estate, she explained, consists of property owned by both the decedent and his/her spouse, and its value is only calculated if the surviving spouse declines the amount left by will and instead claims a share of the decedent's estate; the [allowable] amount [varies from state to state], and in Alaska that would be one-third of the combined estate and is called the widow's election. MS. PIERSON explained that HB 144 would also create a procedure for the establishment of will and trust validity before death; essentially, a person would be able to probate a will before death and have it validated. This would address situations in which questions arise regarding the person's capacity to execute a will or trust, or regarding whether the document was executed as a result of undue influence, duress, fraud, or mistake. This new procedure would allow issues to be brought before the courts while the testator or settlor is still alive and evidence is fresh. Three other states have a similar provision, she noted. The bill would also provide for venue of a probate proceeding if the decedent was not domiciled in Alaska but had significant assets located within the state. 2:29:33 PM BETHANN B. CHAPMAN, Attorney at Law, Faulkner Banfield, PC, after mentioning that she has practiced trust and estate law for the past 22 years and that she is a member of the informal group of trust and estate attorneys that has been recommending specific changes to Alaska's trust and estate laws, said she supports HB 144. In response to a question, she offered her understanding that the bill itself doesn't need to be altered, adding her belief that the provisions regarding what she called the "pre-death probate procedure" in particular will be very effective in reducing litigation among families. REPRESENTATIVE GRUENBERG referred to proposed AS 13.06.120(3), which says in part that a person representing another person is not liable for acts or omissions made in good faith, and questioned the use of this standard. MS. CHAPMAN indicated that that [provision] would not be applicable to trust and estate attorneys, but rather to anyone [else] who is representing another beneficiary in a trust matter - for example, one sibling representing another sibling. If an attorney were representing a beneficiary, the attorney would still be held to his/her professional standards. The good faith standard in proposed AS 13.06.120(3) is the same standard used with regard to a trustee's actions, as is noted in the [American Law Institute's (ALI's) Restatement (Third) of the Law of Trusts]. REPRESENTATIVE GRUENBERG asked whether the good faith standard in proposed AS 13.06.120(3) would apply to a bank or other professional institution that represents a beneficiary. MS. CHAPMAN replied, "It's the nature of the representation that we're focusing on, not necessarily who the individual is, and even if it were a bank, when we have banks serve as trustees, there is always a threshold of good faith." In response to a further question, she offered her understanding that the standard of good faith is defined in case law and in the Restatement (Third) of the Law of Trusts, but not yet in Alaska statute. It means that one is acting in the best interests of the person whom one is representing. 2:36:53 PM REPRESENTATIVE GRUENBERG referred to proposed AS 13.12.545(4) - part of the provisions regarding validating a will before death - and noted that it says in part that in order for a will to be declared valid, the petition must be signed by two individual witnesses. He questioned whether language stating that those two individuals cannot be beneficiaries ought to be added to the bill. MS. CHAPMAN pointed out that under current law, witnesses to a will do not need to be disinterested parties and can in fact be beneficiaries; this is the generally-recognized rule throughout the country. In response to questions, she assured the committee that the standard of good faith stipulated in proposed AS 13.06.120(3) won't absolve someone who acts negligently or unreasonably, that there is no chance that this standard could be misinterpreted, and that the court has already issued rulings on [this standard] and no one considered it to be a loophole. REPRESENTATIVE GRUENBERG said he supports HB 144, and indicated that he would be researching the issues raised further as the bill continues through the process. Again, of particular interest to him, he relayed, is to ensure that the standard of good faith stipulated in proposed AS 13.06.120(3) would be interpreted as Ms. Chapman asserts it would be, since that standard would be at the heart of certain types of litigation. MS. CHAPMAN, in response to a question, indicated that a typed will would need to be signed by two witnesses but wouldn't need to be notarized, and that in contrast, a handwritten will need only be signed by the person. REPRESENTATIVE GRUENBERG, referring to the provisions regarding validating a will before death, offered an example in which an absent heir later sues the estate, claiming that the will is not binding on him/her because he/she didn't have a right to participate in the validation proceeding due to his/her absence. He asked what the result would be in such a situation. MS. CHAPMAN explained that notice must be provided to all heirs of the individual whose will is being probated before death; therefore, if any heirs are not provided adequate notice in accordance with the statutes, then the will won't be binding on those heirs. In response to a further question, she explained that those who are not named in a will have no standing to challenge the will absent producing "a contract to make a will." REPRESENTATIVE GRUENBERG - referring to proposed AS 13.12.540(a), which, in the provisions pertaining to validating a will before death, addresses venue - questioned whether dual, and perhaps dueling, probates would be required in situations involving testators domiciled outside of Alaska. MS. CHAPMAN relayed that multiple probates already occur in situations involving testators with property in multiple states. Generally, one court will take the original jurisdiction, and [the bill] allows - consistent with what she termed the "conflicts of laws" provisions - for Alaska to take the original jurisdiction if that's the wish of the decedent. In response to a question, she confirmed that there is already a body of law addressing such situations. 2:47:44 PM REPRESENTATIVE GATTO moved to report HB 144 out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, HB 144 was reported from the House Judiciary Standing Committee.