Legislature(2009 - 2010)BELTZ 105 (TSBldg)

04/06/2010 01:30 PM Senate LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HB 253 Out of Committee
Moved CSHB 287(JUD) Out of Committee
Moved HB 354 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
        HB 287-UNIFORM ACT: PROPERTY INTEREST DISCLAIMER                                                                    
1:58:03 PM                                                                                                                    
CHAIR PASKVAN announced  HB 287 to be  up for consideration.[CSHB
287(JUD) was before the committee.]                                                                                             
1:57:01 PM                                                                                                                    
REPRESENTATIVE  MAX  GRUENBERG,  sponsor of  HB  287,  introduced                                                               
Gretchen Staft, his chief of staff  who is a member of the Alaska                                                               
Bar.  He  said this  updates  the  existing Uniform  Probate  law                                                               
specifically,  AS  13.12.801  that deals  with  "disclaimers."  A                                                               
disclaimer is a device in probate  law where if a person is given                                                               
a bequest,  is a devisee  under a will or  is a beneficiary  of a                                                               
trust, he  can say he  doesn't want  to take a  particular asset.                                                               
It can be  done for a number of reasons:  because for example the                                                               
person isn't  able to  manage it  if it's a  business or  a house                                                               
that  requires  active  management   or  for  tax  purposes.  For                                                               
example, if he  leaves money to his  son and he is  elderly or in                                                               
bad  health and  doesn't  want  to be  taxed  on that  particular                                                               
bequest he can disclaim it and  it goes directly to his heir, the                                                               
grandson. That saves a substantial amount of federal taxes.                                                                     
He explained that  originally this issue was covered  in a single                                                               
section and since  then the world of probate law  has gotten more                                                               
complex and  tax law has  changed. As a result  the commissioners                                                               
on  uniform state  laws have  enacted the  Uniform Disclaimer  of                                                               
Property  Interest Act,  which repeals  the original  section and                                                               
updates  it in  a separate  act. This  just updates  the existing                                                               
REPRESENTATIVE  GRUENBERG said  they made  very few  changes, but                                                               
one they  did make was  to the  question of whether  any creditor                                                               
claims would survive.  An amendment says you  cannot escape child                                                               
support  obligations by  disclaiming, because  some people  would                                                               
rather see  their money go away  than see their ex-spouse  get it                                                               
and take care of the kids and that is not good public policy.                                                                   
2:02:14 PM                                                                                                                    
SENATOR MEYER noted that this started  in 1999 and 16 states have                                                               
adopted it since then. Why haven't more states jumped on board?                                                                 
REPRESENTATIVE  GRUENBERG   replied  that  he  thinks   that  the                                                               
Commission on Uniform State Laws has  a lot of bills on a variety                                                               
of subjects; some of them are  very timely and important like the                                                               
Uniform  Electronic Signatures  Act that  has to  keep pace  with                                                               
commerce.  Others  are  less  publicized, and  only  one  or  two                                                               
probate laws  get passed  a year. Probate  laws aren't  very sexy                                                               
and many  lawyers don't  deal with  them. One  of the  bills they                                                               
brought last year  was the UCC update, which  they did. Sometimes                                                               
it has  to politically find  someone who  wants to push  it. That                                                               
doesn't mean it's controversial.                                                                                                
The only  controversy he is  aware of is  a series of  law review                                                               
articles  between the  reporter who  drafted this  and one  other                                                               
practitioner from  different parts of  the country who  have some                                                               
basic philosophical differences.                                                                                                
2:05:00 PM                                                                                                                    
TERRY  THURBON, Chief  Administrative Law  Judge and  Uniform Law                                                               
Commissioner, State of Alaska, said  she wasn't aware of anything                                                               
in the Act that  should be a problem for Alaska,  and since 23 or                                                               
24  other states  have enacted  this already,  that provides  the                                                               
needed momentum.                                                                                                                
REPRESENTATIVE GRUENBERG  said this  bill was  introduced several                                                               
years  ago  by Representative  LeDoux,  and  the there  was  some                                                               
controversy  about   the  child  support.  That   was  cured  and                                                               
Representative  LeDoux is  no longer  here, so  it took  a little                                                               
while to pick it up again.                                                                                                      
He stated  that the  folks in Alaska  brought this  bill forward;                                                               
it's  a uniform  act,  but the  commissioners traditionally  only                                                               
bring two or three bills a year to the legislature.                                                                             
2:07:30 PM                                                                                                                    
DAVE SHAFTEL,  estate and trust  attorney, Anchorage,  Alaska, he                                                               
is a member  of an information group of lawyers  who work in this                                                               
area and  have been  working with the  legislature since  1997 to                                                               
suggest what  they think would  be good additions to  Alaska law.                                                               
This bill  came to his  attention a  couple of years  ago through                                                               
Representative LeDoux and  they asked for time to  study it. They                                                               
worked on it and consulted with  a law professor at Florida State                                                               
University who had written a number  of articles about it. He was                                                               
supportive but  suggested changes  that were  very good.  Some of                                                               
them  that they  thought fit  Alaska were  incorporated into  the                                                               
legislation. They came back with the  bill last year, which was a                                                               
very busy year  and the bill didn't get through  then. They think                                                               
it's a very good bill.                                                                                                          
2:09:21 PM                                                                                                                    
SENATOR THOMAS asked  for an example of the situation  on page 7,                                                               
line 13,  paragraph (e)  that says  "in the  case of  an interest                                                               
created by  a beneficiary  designation made  before the  time the                                                               
designation  becomes irrevocable,  disclaimer shall  be delivered                                                               
to the person making the beneficiary designation."                                                                              
MR. SHAFTEL explained  that this whole section  is procedural and                                                               
describes how  the knowledge of this  disclaimer gets transferred                                                               
according to  the rules  stated in this  statute or  according to                                                               
directions  in the  instrument that  created that  property right                                                               
and goes on to whomever is  entitle to it. Lines 13-15 talk about                                                               
an interest created beneficiary  designation made before the time                                                               
the designation becomes irrevocable.  For example, you might have                                                               
a  life  insurance  policy  and  you  might  make  a  beneficiary                                                               
designation in  that policy of your  son or daughter that  is not                                                               
irrevocable. That  beneficiary designation can be  changed at any                                                               
time.  But  if  your  daughter  does not  want  to  receive  that                                                               
property  and  would  rather  it  go to  her  children,  she  can                                                               
disclaim  that   interest.  The  disclaimer's  notice   would  be                                                               
delivered back to the person  making the beneficiary designation.                                                               
He said  these provisions attempt  to answer questions of  how to                                                               
make a disclaimer effective.                                                                                                    
SENATOR THOMAS  asked if  someone passes  away, does  that create                                                               
the situation where the designation becomes irrevocable.                                                                        
MR. SHAFTEL answered yes.                                                                                                       
CHAIR PASKVAN asked what his  thoughts were about the addition of                                                               
the child support obligation.                                                                                                   
MR.  SHAFTEL  said it  is  just  fine.  It's one  exception  that                                                               
appears in other areas of trust law.                                                                                            
2:14:50 PM                                                                                                                    
CHAIR PASKVAN closed public testimony.                                                                                          
SENATOR THOMAS moved to report  CSHB 287(JUD) from committee with                                                               
individual recommendations  and attached zero fiscal  note. There                                                               
were no objections and it was so ordered.                                                                                       
2:15:55 PM                                                                                                                    
CHAIR  PASKVAN found  no  further business  to  bring before  the                                                               
committee and adjourned the meeting at 2:15 p.m.                                                                                

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