HB 273-VEHICLES: TRANSFER ON DEATH TITLE  8:53:10 AM CHAIR LYNN announced that the final order of business was HOUSE BILL NO. 273, "An Act relating to the transfer of the title to a vehicle, including certain manufactured homes and trailers, on the death of the owner; and providing for an effective date." 8:53:20 AM DENEEN TUCK, Staff, Representative Bob Lynn, Alaska State Legislature, on behalf of the House State Affairs Standing Committee, sponsor, on which Representative Lynn serves as chair, announced that HB 273 was proposed by the House State Affairs Standing Committee, and she deferred to Representative Gruenberg for presentation. 8:53:50 AM REPRESENTATIVE GRUENBERG thanked the chair and committee members for their cooperation in haring the proposed legislation. 8:54:45 AM REPRESENTATIVE GRUENBERG stated that HB 273 is based on the concept of "transfer on death" (TOD) in which people can plan their estates avoiding the problems, delay, and expense of probate. The proposed legislation follows other TOD provisions in statutes in Alaska - TOD bank accounts, TOD brokerage accounts, and TOD deeds for real estate. Representative Gruenberg expressed that the TOD concept has been very successful and HB 273 proposes to expand that concept to vehicles. He professed that the only litigation in Alaska concerning TOD of which he was aware was a case brought to his attention by probate attorney Beth Chapman. He said he is working on an amendment to address that issue and Ms. Chapman will be available at the next meeting to testify. REPRESENTATIVE GRUENBERG continued that 15 states have similar legislation to HB 273 and four states have expanded the TOD concept to watercraft. The proposed legislation was drafted with the help of the Division of Motor Vehicles (DMV) using the legislation from the 15 states. The proposed legislation does not include watercraft or snow machines, as they are titled differently, and aircraft are under federal jurisdiction. 9:00:36 AM REPRESENTATIVE GRUENBERG went on to describe the process, which he maintained is very simple. The vehicle registration application would provide a place to designate a beneficiary. Only human owners could designate beneficiaries; corporations could not, because they do not die. The beneficiary designation may be an individual, two people in a joint tenancy, or an organization. He offered that the proposed legislation could be applied to charitable giving. Representative Gruenberg continued by stating that under HB 273, vehicle liens would remain with the vehicle. The beneficiary could be changed by reregistering the car. If the vehicle was sold, the beneficiary designation would become invalidated. He said the beneficiary may decline to accept the property. REPRESENTATIVE GRUENBERG referred to page 3, line 17, to discuss one remaining issue: namely, the claims of unsecured creditors. He explained that the draft version of the proposed legislation was initially written so that a claim against the vehicle's owner would not survive the transfer to the beneficiary upon the owner's death. Responding to concerns of Representative Lynn and his staff, the proposed legislation [Version P] now states that upon transfer to the designated beneficiary, the TOD title of the vehicle would be subject to "claims of creditors against the owner or the owner's estate." Representative Gruenberg further indicated that subsequent legal advice, illuminating the potential for complicated and time-consuming probate, prompted him to pursue drafting an amendment that would ensure the language in the proposed legislation will be the same as language in the transfer on death deed (TODD) bill - that is, giving creditors a year to make a claim. He added that the proposed amendment would be forthcoming. 9:06:10 AM REPRESENTATIVE KELLER, citing the expense and time involved with legislation, asked Representative Gruenberg to describe what HB 273 would provide beyond what is currently available by listing a second owner for a vehicle. REPRESENTATIVE GRUENBERG alluded to a statute in Title 28 to discuss "joint tenancy with the right of survivorship" and "tenancy in common" as they apply to vehicle ownership. He defined joint tenancy with the right of survivorship as a co- ownership in which ownership may pass only to the surviving joint owner or owners in case of the death of a joint tenant. Tenancy in common he described as shared ownership; however, when a person dies, his/her interest in the vehicle is passed on to whomever he/she has chosen. Representative Gruenberg made the point that in either case, the tenants are current owners with rights of ownership. He emphasized that TOD titles are quite different. The owner maintains full ownership during his or her lifetime, and transfer of the vehicle to the beneficiary is an automatic pass through upon death of the owner. 9:10:31 AM REPRESENTATIVE KELLER asked for more information to understand the need for this legislation in terms of public interest. REPRESENTATIVE GRUENBERG declared that it is impossible to know how many will take advantage of this, but he has been informed that the concept of the TODD and the TOD brokerage accounts is very popular. He further insisted that many people have expressed an interest, he has heard no opposition, and it will take time for awareness. In response to Representative Keller's concern for the legislature's limited time, Representative Gruenberg mentioned that the proposed legislation would only be heard in the current committee and on the floor. 9:12:41 AM AVES THOMPSON, Executive Director, Alaska Trucking Association (ATA), testified in support of HB 273. He stated that ATA is a statewide organization representing the interests of nearly 200 member companies from Barrow to Ketchikan. He affirmed that ATA believes that the proposed legislation would make the transfer of a vehicle upon death much easier. He further asserted that the process makes the intentions clear and would allow for the transfer of the vehicle without probate. Mr. Thompson added that although many of the ATA members are corporations, there are a significant number of individuals in the organization who could benefit from HB 273. He asked for committee support of the proposed legislation. 9:13:58 AM REPRESENTATIVE VAZQUEZ requested clarification for why 120 days was chosen for the length of time the beneficiary must survive the owner before the title to the vehicle would be transferred. REPRESENTATIVE GRUENBERG responded that the length of time chosen is as designated in probate code, and that the time interval applies to all of the TOD statutes in Alaska. REPRESENTATIVE GRUENBERG then made a correction - the specified time in the proposed legislation is 120 hours, not days. 9:15:32 AM NICOLE THAM, Driver Services Manager, Division of Motor Vehicles (DMV), Department of Administration (DOA), stated that the division had no objection to HB 273. REPRESENTATIVE KELLER mentioned that the fiscal note states that the DMV will absorb the costs of implementing the requirements of the proposed legislation. He asked Ms. Tham to describe exactly what the DMV would be absorbing. 9:16:49 AM MS. THAM responded that the DMV would incur about three weeks of programming costs, which would be absorbed through the title fee collected for the issuance of a TOD title. She also stated that the DMV would need to update the title form, registration form, and application form, but didn't know at this time the expense related to these modifications. She asserted that the DMV would be able to absorb this cost as well. REPRESENTATIVE GRUENBERG directed attention to page 4, lines 20- 22, to explain that the authority would be given to the DMV to set any additional fees necessary to implement HB 273. MS. THAM confirmed Representative Gruenberg's statement. REPRESENTATIVE GRUENBERG referred to a letter in the committee packet from the Alaska Automotive Dealers Association (AADA) in support of the proposed legislation. 9:19:36 AM BOB MAIER, Executive Director, Alaska Manufactured Housing Association (AMHA), testified in support of HB 273. He explained that AMHA is a statewide organization of manufactured home community owners and managers. CHAIR LYNN asked if manufactured homes includes trailers. MR. MAIER stated that trailers are included as manufactured homes. Mr. Maier added that he had one concern, which was with the phrase "certain manufactured homes", and he offered his understanding that there was an amendment forthcoming for clarification. 9:21:28 AM CHAIR LYNN announced that HB 273 was held over.