HB 81-VEHICLES/BOATS: TRANSFER ON DEATH TITLE  3:27:09 PM CHAIR SHAW announced that the final order of business would be HOUSE BILL NO. 81, "An Act relating to the transfer of a title on the death of the owner; and providing for an effective date." 3:27:42 PM REPRESENTATIVE GEORGE RAUSCHER, Alaska State Legislature, prime sponsor, presented HB 81. He provided the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: The process of probate in the state of Alaska can take anywhere from six months to several years, and can cost family members and beneficiaries thousands, potentially tens of thousands of dollars in legal and filing fees. While the State Legislature has already taken great strides to reduce the costs of probate, there is still much room for improvement. House Bill 81 continues in spirit with the Uniform Real Property Transfer on Death Act (URPTDA), which unanimously passed both the House and Senate in 2014. URPTDA 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. In 2016, legislation similar to HB 81 was introduced but the legislation failed to pass that session. HB81 is nearly identical, although it expands the concept to apply both to vehicles and boats that are issued titles through the state. HB81 continues the ongoing effort to reduce the costs of probate for Alaskans and creates a streamlined service through the DMV through which they can designate beneficiaries for both cars and boats through a simple form. 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 will be self-sustaining through fees. At no cost to the state, HB 81 will allow countless Alaskans to pass down boats, vehicles, and some manufactured homes to beneficiaries with more ease, and will help simplify and streamline the potentially complicated, costly, and painful process of probate following the death of a loved one. 3:31:10 PM RYAN MCKEE, Staff, Representative George Rauscher, Alaska State Legislature, prime sponsor, provided the sectional analysis for HB 81 [included in the committee packet], which read as follows [original punctuation provided]: Section 1:  Adds a new section under AS 05.25 that allows owners of boats, for which the Department of Administration (DoA) issues titles, to obtain a transfer on death (TOD) title. Section 2:  Amends AS 13.33.101(a) to add a transfer of a boat or vehicle by a TOD title to the existing list of acceptable nonprobate transferable property. Section 3:  Creates a provision under AS 13.33 for a transfer on death (TOD) title for boats and vehicles. Creates and defines the mechanism through the Division of Motor Vehicles (DMV), by which individuals will obtain, revoke, or change their transfer on death title and defines the parameters of the transfer on death title. (a)-(c) Obtaining a TOD Title Creates a provision under AS 13.33 for a transfer on death title for vehicles and boats for which DoA issues titles. o This includes some manufactured homes for which the DMV issues titles under AS 45.29.102(66). These homes are without a permanent foundation and transportable in one or more sections. • Requires that the transfer of title to the designated beneficiary occurs when the sole owner or last surviving joint owner of the vehicle dies. • Requires that owners of the boats or vehicles file a form through the DMV and pay associated fees to apply for a TOD title. • Limits the TOD titles to two beneficiaries. (d) TOD titles effective without notice or  consideration  • Provides that TOD titles will not require notice or acceptance by the designated beneficiary. • Provides that TOD titles will not be subject to consideration, the process by which there is an exchange or "quid pro quo" required from the recipient of the assets. o Language taken from TOD deed statute under AS 13.48.060. (e) TOD titles are nontestamentary  • States that TOD titles are nontestamentary, meaning that the associated vehicles do not need to be provided for in the decedents will. (f)-(g) Revocation or Change to TOD titles  • Provides that the owner may revoke or change the designated beneficiary on the TOD at any time without the beneficiary's consent. • Explains the process by which owners may revoke or change a TOD title. o The owner can either assign and deliver the certificate of title for the vehicle to another person, thereby revoking the TOD title, or; o file with the DMV to reissue the title without a designated beneficiary or with a different designated beneficiary. (h) Designated beneficiaries right to disclaim  interest  • Allows designated beneficiaries to refuse the boat or vehicle designated to them in a TOD title. o Language taken from TOD deed statute under AS 13.48.100. (i) TOD titles subject to decedent's creditors,  contracts, etc.  Subjects the TOD title to creditor's claims against the owner's estate, as well as to other interests, contracts, liens, encumbrances, assignments, and other interests. • These interests remain attached to the boat or vehicle after it is transferred to the designated beneficiary. (j-m) Enforcing liability upon TOD titles  • Imposes the same procedures for enforcing liability upon TOD titles that is applied to TOD deeds under AS 13.48.110 and AS 13.48.088. o Provides that the estate may enforce liability against boats or vehicles with TOD titles if the owner's estate does not cover an allowed claim. o States that if there are multiple vehicles and/or boats, and a liability exists in the deceased's estate, the liability will be apportioned to each asset in proportion to its net value. o Requires that a proceeding to enforce a liability must begin within 12 months of the owner's passing and can only begin once proper notification to beneficiaries has occurred. o Stipulates that TOD titles do not affect rights of ownership before the owner's 3 Sectional Analysis: 31-LS0422\U death, and do not affect rights of the designated beneficiary or creditors of the owner(s). o TOD titles do not give legal or equitable preference to the designated beneficiary. o TOD titles do not affect designated beneficiaries' eligibility for state public assistance. (n-p) Uniform standard of survivorship, requirements to receive TOD title • Requires that the designated beneficiary survive the previous owner by 120 hours. • Requires that the designated beneficiary submit proof of the owner's death and an application and associated fees to the DMV. • If there are two beneficiaries listed on the TOD title, they become joint owners. (q) TOD titles may not be changed by other instruments  • Provides that TOD titles may only be changed by the process outlined in section 3 and not by a will or any other instrument. (r) Gives the DoA authority to develop regulations to implement the TOD titles, establish necessary forms and fees, etc. (s) Definitions Section 4:    Amends AS 13.48.110(c) to add a person acting on behalf of the surviving spouse of the decedent to the list of people who may demand to enforce liability against the decedents' property. Section 5:    Adds a new section to AS 28.10.275, relating to vehicle titles, to clearly state that owners of vehicles for which the DMV issues titles may obtain a TOD title. Section 6:    Gives the DoA authority to develop necessary regulations. Section 7: Applies an immediate effective date to section 5 of the bill to allow the department to develop regulations. Section 8:    Applies an effective date of July 1, 2024 to the legislation except for sections 5 and 7. 3:38:14 PM CHAIR SHAW inquired about the Department of Administration's (DOA's) fiscal note. MR. MCKEE explained that the Division of Motor Vehicles (DMV), [DOA}, estimated 600 program hours at a cost of $125 dollars per hour for a total estimated cost of $75,000. CHAIR SHAW invited questions from members of the committee. 3:38:55 PM REPRESENTATIVE STORY asked about the cost of completing a title transfer, or transfer on death ("TOD"), for boats or vehicles. REPRESENTATIVE RAUSCHER deferred to the division. 3:39:42 PM JEFFREY SCHMITZ, Director, DMV, DOA, responded that the cost of producing a title was $15 with no lien or $30 with a lien. REPRESENTATIVE STORY asked whether the fifteen- or thirty-dollar payment was a one-time fee. REPRESENTATIVE RAUSCHER deferred to the division. MR. SCHMITZ explained that the fee [of $15 or $30 respectively] was an existing cost associated with replacement titles and separate from the bill. He clarified that the department's fiscal note specifically described the programming charges required to implement the provisions outlined in the bill. REPRESENTATIVE STORY asked for verification that a person could refuse a gifted boat or vehicle if he/she could not afford to keep it. REPRESENTATIVE RAUSCHER deferred to Mr. McKee. 3:43:43 PM MR. MCKEE confirmed that subsection (h) in Section 3 of the bill allowed a designated beneficiary to refuse a boat or a vehicle. REPRESENTATIVE RAUSCHER clarified that the fiscal note had been reduced to an indeterminate amount. CHAIR SHAW opened public testimony on HB 81. 3:45:42 PM BETHANN CHAPMAN, Representing Self, share that she was a practicing attorney in trust, estate, and probate areas. She stated her support for the bill, which she described as an additional tool to pass assets at death without the need for the probate process. 3:46:36 PM CHAIR SHAW closed public testimony on HB 81. He announced that the bill was held over.