Sponsor Statement for HB 196

This Sponsor Statement provides a Summary of the Trust and Probate Improvement bill. In broad scope, this bill would make three changes to Alaska law.

Validity and Probate of Wills

First, it would provide specific rules as to how the validity and effect of a person's Will would be determined. These rules are derived primarily from New York law which has used them effectively for over 25 years. Among other things, these rules would permit a person who resides outside of Alaska to direct for his or her Will to be admitted to probate in Alaska. This, for example, will allow a person who does not reside in Alaska to be able to create trusts under the new Alaska Trust Act on death by Will. This should result in business for Alaska banks and trust companies and Alaska professionals in the tax, financial and legal industries.

Uniform Trusts Act

This bill would also adopt the Uniform Trusts Acts which has been adopted in several other states. This Uniform Act provides certain definitive rules about certain trustee responsibilities and obligations. Some modifications to the language of the Uniform Act are made by the bill. These modifications are intended, among other things, to clarify that a trustee is responsible only for those powers which the trustee is authorized to exercise.

Allocation of Receipts to Trusts

The bill also would make changes to the rules relating to the allocation of receipts between income and principal of trusts. Similar provisions have been enacted in other states, including Delaware and South Dakota. Among other consequences, it will allow certain charitable remainder trusts to operate more efficiently under Alaska law than under the law of certain other states. A similar provision adopted under Delaware law has caused three of the country's largest trust institutions, the Chase Manhattan Bank, J.P. Morgan Trust Company and Wilmington Trust Company, to offer "commercial" forms of charitable remainder trusts under the law of the state of Delaware. This change will permit Alaskans to be able to create similar trusts under the law of Alaska and will permit institutions in Alaska having trust powers to offer products similar to those offered by Chase, J.P. Morgan and Wilmington Trust.