SB 47-LIFE INSURANCE/ANNUITY EXEMPTIONS  1:50:11 PM CHAIR COSTELLO announced the consideration of SB 47. "An Act relating to exemptions for cash surrender values, accrued dividends, and loan values of life insurance and annuity contracts." 1:50:41 PM GERMAN BAQUERO, Intern, Senator John Coghill, introduced SB 47 on behalf of the sponsor. He spoke to the following sponsor statement: [Original punctuation provided.] Under the Alaska Exemptions Act under Chapter 38 of Title 9 in the Code of Civil Protections there are currently six exemptions that exist from attachment, garnishment, or execution by a creditor in civil actions. One of these exemptions under AS 09.38.025(a) is an exemption of up to $500,000 on un-matured life insurance. SB 47 goes in and repeals the $500,000 limit in AS 09.38.025(a). In effect SB 47 brings AS 09.38.025(a) in line with other exemptions found in the Alaska Exemption Act, such as: burial plots, longevity bonuses, tuition credits, the permanent fund dividend, medical benefits, liquor licenses, payments found under the Senior Benefits Payment Program, compensation of benefits exempt under federal law, and retirement plan interests and payments. While the law currently provides protection of non- estate assets up to $500,000, having a limit in the first place clearly does not assist in the protection of assets or pre-bankruptcy planning. While states like South Carolina, Wisconsin, and New York expressly define cash surrender values from life insurance as exempt, still many states ultimately rely on judicial interpretation of a debtor's intent. This bill will provide people with a better security and planning for their families after they have passed on. This bill encourages personal responsibility and protects the future of Alaskan families. 1:54:17 PM SENATOR JOHN COGHILL, Sponsor of SB 47, described the legislation as an estate planning tool that extends the exemption to someone who is investing his/her own money. He noted that the bill provides fraud protections. SENATOR STEVENS asked who the bill benefits and who it harms. SENATOR COGHILL replied it helps people who are building an estate through industry-based planning. MR. BAQUERO added that it will provide security to those who seek insurance as part of their estate management and it will help the beneficiaries of these insurance policies while the policies are unmatured. Once the policy is matured and the assets have been transferred to the beneficiaries, they are subject to restitution or garnishment. CHAIR COSTELLO asked Lori Wing-Heier to discuss the fiscal note. 1:59:38 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community and Economic Development (DCCED), stated that the bill amends Title 9 and doesn't directly impact the insurance statutes in Title 21. The division submitted a zero fiscal note in the belief that it will not impact what the division collects on premium taxes. CHAIR COSTELLO asked if the administration has a position on the bill. MS. WING-HEIER replied she hasn't heard that the administration had taken a position. CHAIR COSTELLO asked Mr. Blattmachr to provide his perspective of the bill. 2:01:08 PM MATHEW BLATTMACHR, Vice President and Trust Officer, Alaska Trust Company, stated that SB 47 helps keep Alaska in the top tier of states for estate planning and financial planning in general. CHAIR COSTELLO asked him to discuss the fraud protections provided by the four-year look-back at the state level and ten- year look-back at the federal level for bankruptcy proceedings. MR. BLATTMACHR clarified that the legislation wouldn't change the fact that these policies are assignable as collateral, and could be attached if assigned. He also pointed out that Alaska's estate planning laws protect individuals who engage in estate and financial planning, but only to the extent that they do not willfully defraud a creditor. He opined that the four-year state look-back to review bankruptcy proceedings and the ten-year federal look-back are ample procedures to prevent that type of malicious activity. CHAIR COSTELLO asked if he had information about other states' policies regarding creditors. MR. BLATTMACHR recounted that South Dakota and Nevada have a two-year look-back, Ohio is 18 months, Delaware is three years, and Alaska matches a number of other states with a four-year look-back. 2:04:32 PM LINDA HULBERT, representing herself, said she's worked in the insurance industry for 25 years and she supports SB 47. It will help people to legitimately plan for their future and help Alaska come on par for planning purposes with states such as New York, Florida, Texas, and Arizona. She recounted that many Alaskans who have businesses put any extra money back into their business in the early years rather than putting it away for retirement. SB 47 provides a means for these people to save for their retirement when they can by putting money into life insurance. She opined that the bill could raise revenue for the state by encouraging people to save, because for every $100,000 the state would receive $2,700. 2:07:48 PM CHAIR COSTELLO announced she would hold SB 47 in committee for further consideration.