HB 321 - UNIFORM PRUDENT INVESTOR ACT                             
                                                                               
REPRESENTATIVE JOE RYAN, prime sponsor of HB 321, said the bill                
removes restrictions on trusts and trustees and allows for the                 
implementation of modern portfolio management techniques.                      
REPRESENTATIVE RYAN said the bill is endorsed by the American Bar              
Association, the American Bankers' association and has already been            
adopted in 20 other states.                                                    
                                                                               
CHAIRMAN TAYLOR commented that, historically, through neglectful               
management, the state of Alaska was held liable for not following              
the prudent investor standard and investing in junk bonds.                     
Consequently, the state had to put up some $30 million and only                
recovered a portion of this. CHAIRMAN TAYLOR asked if this bill                
changes the prudent investor standard that has always been in                  
effect in Alaska. Representative RYAN said HB 321 is based on the              
responsibility of a trustee, and gives a trustee the authority to              
delegate investment management. The trustee is allowed to use a                
sophisticated risk return analysis to guide important decisions and            
REPRESENTATIVE RYAN suggested this would preclude the type of                  
situation CHAIRMAN TAYLOR had referred to, as the trustee would                
have delegated the management authority to a professional                      
investment manager.                                                            
                                                                               
MR. DICK THWAITES, an attorney specializing in estate and gift                 
taxes testified via teleconference from Anchorage. MR. THWAITES                
indicated the bill closely follows the National Conference of                  
Commissioners on Uniform State Law, covering both trusts and                   
estates and unifies investment standards required of trustees. MR.             
THWAITES said the bill can be likened to the Uniform Commercial                
Code, in that it standardizes things and will make our state                   
standards easier to understand.                                                
                                                                               
Number 115                                                                     
                                                                               
SENATOR PARNELL referenced page 3, line 9 which reads, "a trustee              
shall make a reasonable effort to verify facts relevant to the                 
investment . . . " SENATOR PARNELL asked if this increases the                 
standard of care from the existing law. MR. THWAITES said the                  
standard will remain the same but the trustee must be a                        
knowledgeable one, considering and serving the specific needs of               
their beneficiary. He said it will allow trustees to employ fund               
managers to help meet this requirement.                                        
                                                                               
SENATOR PARNELL asked what the policy reason were for passing the              
bill. MR. THWAITES replied it makes the uniform law consistent with            
that of other states, provides a foundation for trustees that does             
not currently exist, unifies the terminology, and clarifies many of            
the questions of professional fiduciaries around the state.                    
                                                                               
SENATOR PARNELL asked how many states have adopted the Uniform                 
Prudent Investor Act and MR. THWAITES replied nineteen have adopted            
it, and it is pending in seven others as of 7/1/98.                            
                                                                               
SENATOR PARNELL moved HB 321 am from committee with individual                 
recommendations. Without objection, it was so ordered and CHAIRMAN             
TAYLOR called SB 329 as the next order of business.