SB 63-TRANSFER RESTRICTIONS ON TRUSTS  9:09:18 AM CHAIR MENARD announced the first order of business to come before the committee would be SB 63. ESTHER CHA, staff to Senator McGuire, sponsor of SB 63, presented the committee substitute (CS) for SB 63, labeled 26- LS0317\E. Section 1 of SB 63 now reflects that paragraph (3), subparagraph (G) has been deleted. On page 3 of Version A, in Section 1 [amending AS 34.40.110(b)], paragraph (3), subparagraph (F) has been deleted. MS. CHA explained that on page 3 of Version E, subparagraph (F) was subparagraph (G) in Version A. Subparagraph (E) in Version E is now a combination of what was subparagraphs (E) and (F) in Version A. She explained that change was made because trust practitioners felt more broad language was better, referring to distributions "governed by a standard". Terry Bannister, lawyer, Legislative Services, was also consulted. 9:12:21 AM SENATOR PASKVAN referred to Section 3, [amending AS 34.40.110(l)] pages 3-4 and asked why the assets in the trust are not considered a factor or economic circumstance at a time of divorce. THERESA BANNISTER, Attorney, Legislative Legal Services, replied that she drafted the language to implement what the trust practitioners wanted to do. She suggested that with a transfer restriction on the trust, a person is prohibited from distributing a particular interest before realizing that interest. Prior to realizing that interest, it could not be considered in a divorce. SENATOR PASKVAN questioned if provision could be used to avoid paying child support. MS. BANNISTER said the language speaks only to a division of property and not to child support. 9:15:56 AM SENATOR PASKVAN referred to page 1, paragraph (1), and asked why the standard was increased to "clear and convincing evidence". MS. BANNISTER replied that she does not know. DOUGLAS BLATTMACHR, President and CEO, Alaska Trust Company, said the language clarifies that "clear and convincing evidence" is the standard. Ten of the 12 states that have adopted similar legislation use that standard. He said he supports SB 63 as an improvement upon Alaska's trust laws. CHAIR MENARD asked him to speak to the economic gain. MR. DOUGLAS BLATTMACHR replied that over 10,000 Alaskans have taken advantage of legislation improving financial and estate planning. At least 10 jobs in the trust industry have been created and Alaska has received millions in increased life insurance premium tax. Alaska is considered one of the top four states for estate and financial planning. Attorneys, accountants, life insurance agents and stock brokers have had increased business. 9:19:01 AM DAVE SHAFTEL, Shaftel Law Offices, said when dealing with proving fraud, the accepted standard is "clear and convincing evidence". Alaska's statute has previously left that out; SB 63 clarifies that as the appropriate standard. The additional provision in Version E, page 3, subparagraph (E), says spend thrift protections provided by existing law are intended to apply whether the trustee is governed by a standard or is given absolute discretion. 9:22:24 AM SENATOR PASKVAN referred to Section 3 which amends AS 34.40.110(l). On page 3, line 31 reads "beneficiary's interest in the trust, whether or not vested, is not considered a factor  or economic circumstance". He asked what the policy is behind this language. MR. SHAFTEL said he has recommended that Section 3 be dropped from SB 63 to make it consistent with the house bill. He understands that will happen between this committee hearing and the next committee hearing. SENATOR PASKVAN asked why Mr. Shaftel wants Section 3 dropped. MR. SHAFTEL said the comparable house bill had an objection. In the interest of getting SB 63 through, dropping Section 3 seems better. JAN TEMPLE, Senior Trust Officer, Alaska USA Trust Company, said Alaska USA Trust Company is in support of SB 63. She hears many comments from attorneys across the Lower 48 about Alaska being one of the top four states for trusts. That status brings in a good deal of business from the Lower 48. RICHARD HOMPESCH, Trust and Estates Attorney, Fairbanks, expressed support for SB 63. SB 63 is a continuation and improvement of Alaska's current trust law and will further establish Alaska as the premiere jurisdiction for trust and estate planning. 9:26:02 AM JONATHAN BLATTMACHR, member, New York, California and Alaska Bars, said SB 63 is exceptionally important legislation to keep Alaska in the forefront for trusts. Bringing in business from the Lower 48 is important and 10,000 Alaskans have also taken advantage of them. CHAIR MENARD asked if Mr. Jonathan Blattmachr understood that Section 3 will most likely be removed due to an objection in the House. She asked if he is in agreement. MR. JONATHAN BLATTMACHR replied he was aware of that and is agreement with removing Section 3 from SB 63. 9:27:31 AM CHAIR MENARD closed public testimony. SENATOR FRENCH moved to adopt a conceptual amendment removing Section 3 (page 3, line 28 - page 4, line 8) from SB 63. There being no objection, the motion carried. 9:28:36 AM SENATOR MEYER moved to report CS for SB 63, 26-LS0317\E as conceptually amended, from committee with individual recommendations and accompanying fiscal note(s). There being no objection, CSSB 63(STA) moved from the Senate State Affairs Standing Committee.