TRUSTS/ESTATES/PROPERTY TRANSFERS MR. BRIAN HOVE, staff to Senator Seekins, sponsor of SB 344, read the following sponsor statement. A vital characteristic of our highly developed economy is the ease with which financial resources flow from one market to another. In fact the magnet-like attraction between and the market that offers the most advantageous terms is, perhaps, best demonstrated within the financial services industry itself. Over the years the Alaskan banking industry has attracted funds to our state as the result of a particular niche we have successfully developed in an obscure corner of the industry known as trust and estate services. Much of this success can be attributed to the foresight demonstrated by the Alaska State Legislature. Since 1997, the legislature has passed numerous bills effectively making Alaska a premier jurisdiction for this financial specialty. Just last year, SB 87 adopted a more recent version of the Uniform Principal & Income Act. And HB 212 updated other portions of Alaska's trust laws. Both were signed into law last summer. While SB 344 may not be as far reaching, it accomplishes the same purpose. It does this by making a host of small technical revisions to current statutes. It updates provisions relating to virtual representation. It clarifies when a trustee can be relieved of its liability. And it adds provisions, which other jurisdictions have already adopted. Keeping our trust statutes current has had a direct positive impact on our state's economy. Over the years, these periodic revisions have helped to bring hundreds of millions of dollars of trust assets into the state and added tens of millions of dollars to local bank deposits. Furthermore, it has increased business activity for attorneys, accountants, life insurance agents and brokerage firms. This, in turn, creates jobs. Necessity, ingenuity and routine advances in technology collaborate on a daily basis to reinvent the world of financial products and services. To date, Alaska has successfully staked out a place in this world through our contemporary set of trust and estate laws. SB 344 seeks to preserve our position in what amounts to a highly fluid marketplace unrestricted by geographical boundaries. It seems reasonable to keep that money flowing this direction. He noted that Beth Chapman and Doug Blattmacher were available to speak to the technical portions of the bill. SENATOR FRENCH commented that legislators have been told that the growth of this industry has had a net positive effect on the general fund. He asked if the Department of Revenue (DOR) has any documentation to back that up. MR. HOVE said he has not seen any documentation but believes it is reasonable that bringing that money to this jurisdiction would have a net positive impact on Alaska's economy. CHAIR SEEKINS pointed out that last year, when considering another trust bill, he saw that premium taxes alone on insurance policies were significant. MR. DOUG BLATTMACHER added: We know that from the insurance premiums that we had - of the premium payments that we had made, we estimate that we've spent about a million and a half dollars additional premium taxes in the state over the last couple of years and that continues to - we continue to get these large insurance policies, which generate additional premium dollars in the state. MR. STEVE GREER, an estate-planning attorney in Anchorage, said he and a group of other estate planning attorneys have approached the legislature each year with legislation to improve existing legislation. He noted that Ms. Chapman was the principal drafter of SB 344. MS. BETH CHAPMAN, an attorney with Faulkner Banfield, told members she has practiced primarily in the area of trusts and estates for the past 16 years. She stated support for SB 344 as it will update Alaska law so that Alaska will continue to have prominence as the state in which individuals will want to deposit their trust assets and a place where residents want to retain their assets. She explained SB 344 has four main parts. The first part contains technical corrections to the Uniform Income Act, which was adopted last year. The second part adds additional trusts to the types of trusts recognized under the spendthrift provisions. These trusts are commonly used and recognized under the Internal Revenue Code. The third part expands the Doctrine of Subsequent Notice found under current Alaska law so that trustees and trust beneficiaries have easier access to the courts. Last, it establishes a statute of limitations for claims against trustees. Current law contains no statute of limitations against a trustee until the trust relationship is terminated. Alaska law now allows perpetual trusts, so that relationship could last for a very long time and stale claims could be brought at any time in the future. Enacting a statute of limitations will allow claims to be brought when necessary soon after they occur or when notice of a claim has been made known to a beneficiary. It also adds a provision to notify beneficiaries of their limitation period, which she believes will be more helpful to beneficiaries. If no notification occurs, the statute of limitation will not run. SENATOR THERRIAULT asked how long the statute of limitations is. MS. CHAPMAN told members under current law, a claim must be brought within six months after the final account. The six month period will continue to be used, but it will run from any report that discloses the nature of the claim so long as the beneficiary is notified of the six-month time limit. SENATOR FRENCH referred to page 2 of the sectional analysis, which addresses changing the trust situs to Alaska. He asked how one locates a trust in Alaska and whether the money must be physically present in an Alaska bank. MS. CHAPMAN said some of the funds do have to be deposited within the state of Alaska in an Alaska bank. Also, the trust must have an Alaska trustee and the trust must be registered with the Alaska Court System. SENATOR FRENCH asked how small of a sum would qualify for a deposit. MS. CHAPMAN thought the amount is not defined in the statute. She noted, however, in her experience deposits have been of a significant amount. SENATOR THERRIAULT stated, for the record, that his wife is a trust attorney and participates in the Alaska Trust Council. He then moved SB 344 from committee with individual recommendations and the attached zero fiscal notes. CHAIR SEEKINS announced that without objection, the motion carried.