CURRENT LEGISLATION

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SB 11 - 32nd Legislature (2021 - 2022)

SB 11 proposes a clarification as to the original intent of AS 34.77.030, a section of the Alaska Community Property Act. 

ATEP strongly SUPPORTS the passage of SB 11.

Summary of Facts:

• Alaska is a separate property state with an opt-in community property regime. This allows married Alaskans to opt-in to community property for some or all of their property by using a community property trust or agreement. 
• There are significant federal tax savings that can be achieved by using this technique, since using community property provides federal "step-up" in basis for the community property assets on the death of the first spouse. An example of an asset often designated as community property is a home shared by a married couple. Without the community property "step-up" in basis on the home in this example, the widowed spouse would be left with a significant tax burden on the appreciation of their spouse's portion of the home. With community property however, the basis of the spouse's portion receives a "step-up" to the value at the date of the death of the first spouse. This can have a significant impact on the tax burden a widowed spouse faces especially if, as is often the case, the majority of what the couple owned is an appreciated asset such as a home. 
• A recent Alaska Supreme Court ruling in a divorce case ruled that appreciation of community property was not community property. This ruling is contrary to the intent of the statute because without appreciation of community property also being community property, the whole tax planning purpose of a community property arrangement is defeated. This is problematic for Alaskans who have used this technique in their estate plans. 
• SB 11 seeks to clarify the intent of the original statute to make express in the statute that appreciation and income of community property are also community property (unless expressly declared otherwise), to protect the estate plans of thousands of Alaskans who have entered into these community property arrangements.

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SB 90 - 32nd Legislature (2021 - 2022)

SB 90 allows for the use of electronic wills in Alaska.

ATEP strongly SUPPORTS the passage of SB 90.

Summary of Facts: 

• With the current landscape of the pandemic and the numerous physically remote communities in Alaska, the need for a means to create a valid electronic will in Alaska has never been greater.
• Allowing for electronic wills would provide a means for all Alaskans regardless of their physical proximity to an attorney's office to create and electronically execute a valid will. 
• Adding this modern option to Alaska's will and probate code, provides an accessable means for Alaskans, particularly those with access barriers, to provide for their family and loved ones in a time of physical distancing. 

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HB 405 & 406 - 32nd Legislature (2021 - 2022)

HB 405 & 406 seek to impose a reporting requirement on all persons associated with an Alaska trust. As proposed, the draft language in these bills would wreak havoc on the estate plans of thousands of Alaskans who use trusts to provide for their families, care for family members with special needs, make charitable bequests, and more.

ATEP strongly OPPOSES the passage of HB 405 & 406 as drafted.

Summary of Facts: 

• If enacted into law as proposed, HB 405 would invalidate an Alaska trust that does not comply with the proposed reporting requirement. This is problematic for numerous reasons and essentially renders trusts useless as a planning tool for Alaskans.
• As proposed, HB 405 introduces a reporting requirement that creates a significant expansion of government oversight over the affairs of private citizens and represents a gross invasion of privacy. 
• As drafted, HB 405 & 406 do not achieve their purported intent (to stop bad actors from doing business in Alaska), while simultaneously causing harm to all Alaskans who use trusts. 
• Alaska Native Settlement Trusts cannot comply with HB 405 & 406 by design, which is extremely problematic for all shareholders.
• These bills are being promoted by groups outside of Alaska as part of a widespread push towards compelling the disclosure of private information. While the need for these bills is being represented as critical in stopping bad actors, like those exposed in the Pandora Papers, from taking advantage of Alaska's trust laws, there is no evidence to support this to be a reality in Alaska.

ATEP's full response can be found here.