HB 157-TRUST COMPANIES & FIDUCIARIES    CHAIRMAN BEN STEVENS called the Senate Labor & Commerce Committee meeting to order at 1:35 p.m. and announced HB 157 to be up for consideration. REPRESENTATIVE LISA MURKOWSKI, sponsor of HB 157, said that it was an update to the Trust Act that was first instituted in 1949 and had seen very little change. She worked with the Division of Banking and Securities for the past three years on this bill and it passed out of the House with considerable support. She explained that the Division of Banking and Securities in conjunction with many other states took model acts from the Conference of State Bank Supervisors and drafted the bill before them. Basically the legislation defines who can conduct a trust business in the state. The statutes presently don't give any guidance as to that. They also define the exemptions to the act, so that a person who has been appointed as a trustee of their family trust or a law firm or lawyer who does an occasional trust is not subject to HB 157. In addition, the bill details the powers of the trust companies, the requirements for chartering and provisions such as minimum statutory capital requirements, confidential handling of the customer information, disclosure of conflicts of interest and provide for mergers, sales, voluntary and involuntary liquidations. "It is to provide the parameters and the guidelines for those trust companies that would choose to do business in the State of Alaska." REPRESENTATIVE MURKOWSKI said that legislation passed before she came to the legislature makes a concerted effort to attract trust business to the state and this provides guidelines for the companies who decide to come. She said the Mr. Terry Lutz from the Division of Banking and Securities had been working on it all along and could answer questions. CHAIRMAN STEVENS asked how many entities now manage trusts in Alaska. MR. LUTZ, Division of Banking, Securities and Corporations, answered that there are two state chartered trust companies at the time and there were other entities out there that advertised in the yellow pages as doing trusts. Right now it doesn't say who must charter; it says, "five or more people may charter a trust company". It doesn't' require anybody to have a charter. This bill would require that and gives specific guidelines on how to go about doing that. SENATOR TORGESRON asked if it was correct that it takes only one person to start a trust. MR. LUTZ answered yes. SENATOR TORGERSON asked him to explain why it would help to go from four or five to one person to start a trust (page 8, line 3). MR. LUTZ replied that they used model acts from a dozen or more states and used areas that seemed consistent and would work in Alaska. He said further down the bill language talks about the operation and running of the trust company. It needs five or more directors, but just one person can form the company. CHAIRMAN STEVENS said one person can form the company, but to incorporate, they have to go on to laws of incorporation in the next section. MR. LUTZ said that was correct. CHAIRMAN STEVENS asked how many companies in the yellow pages were soliciting that they could manage a trust under the criteria that this bill puts forward. MR. LUTZ replied that he would be contacting those entities if the act is passed and let them know the requirements. SENATOR TORGERSON asked if someone gives a down payment to an attorney or a realtor and they say it's going into their trust account, is that what this bill deals with. MR. LUTZ replied no. There is a specific exemption for that type of trust business. CHAIRMAN TORGERSON asked if retirement funds would come under this. MR. LUTZ replied that it would depend on how things were structured. SENATOR TORGERSON asked if the state was making any money off of this. MR. LUTZ replied no. 1:45 SENATOR AUSTERMAN asked if he contacted these other people for input. MR. LUTZ replied that they contacted the Bar Association, the Alaska Bankers Association and the organizations that had a lot of contacts to get as many people involved as they could. They didn't go into the yellow pages. MR. DAVE SHAFTEL, Estate Planning Attorney, said he is a member of an informal group of attorneys who have been working with the legislature on various estate planning and state trust matters over the last five years. Their emphasis has not been on forming trust companies or trust company businesses, but rather on how this bill would affect residents of Alaska who form trusts and name family members or family friends or charitable organizations as trustees of those trusts. We are comfortable now that there are appropriate exemptions for those areas I have just mentioned where we find that someone should be allowed to be a trustee of a family trust and not have to go through all of the regulatory and capitalization requirements to form a trust company…." He said there was one little area that still needed work. SENATOR TORGERSON asked if the effective dates were correct. CHAIRMAN STEVENS responded that they were going to do a conceptual amendment for those. SENATOR TORGERSON asked if the bill was just repealing all of the old trust language. "There's not a secret repealer in here on something else…" REPRESENTATIVE MURKOWSKI replied that she wouldn't do something like that to him. She wanted to address Senator Austerman's question about who had been contacted. She has worked within the divisions within the Bar Association, the Trust Association informal working group, the two trust companies that are organized right now and any banks that have trust operations. "There has been a relatively broad working group that has gotten together over the past several years. We have made a good effort to alert people and to get their input on this although we have not gone through the yellow pages." SENATOR AUSTERMAN moved a conceptual amendment that would change page 64, line 8, and page 65, lines 12 and 14 to 2003 from 2002. There were no objections and it was so ordered. SENATOR TORGERSON moved to pass SCSHB 157(L&C) am from committee with individual recommendations. There were no objections and it was so ordered.