Alaska Statutes Relating to Estate Planning and Estate and Trust Administration

FREQUENTLY USED ALASKA STATUTES FOR ESTATE PLANNING
Title 09: Code of Civil Procedure

09.38.017 - Exemption of retirement plan interests and IRAs from claims of employees creditors.

COMMENTARY: 2013 amendment extends exemption to protect retirement plans and IRAs from a beneficiary’s creditors.

09.38.025 - Exemption of unmatured life insurance and annuity contracts.

09.38.025(a)

COMMENTARY: 2010 Alaska amendment provides exemption for life insurance and annuity contracts up to $500,000 of accrued dividends and loan values available to the individual.

Title 10: Corporations and Associations

10.45.050 - Issuance of shares.

COMMENTARY: Professional corporation stock may be owned by revocable trust.

10.50.010-.995 - Alaska Revised Limited Liability Company Act.

The following provisions are designed to maximize tax benefits for limited liability companies:

10.50.380 - A Rights of judgment creditors.

COMMENTARY: Charging order is only remedy of creditor of a member. 2013 amendments clarify that excluded remedies include both legal and equitable remedies. Also, 2013 amendments provide that the charging order is the exclusive remedy and applies to limited liability companies with only one member as well as to limited liability companies with more than one member.

Title 13: Decedents' Estates, Guardianship, Transfer, and Trusts

13.06.068 - Choice of law; validity.

COMMENTARY: Allows probate of nonresident’s will.

13.06.120 - Pleadings; when parties bound by orders; notice.

COMMENTARY: Virtual representation. 2010 amendment added designated representative. 2013 amendment clarified that virtual representation not only applies to court proceedings and orders but also applies to non-judicial proceedings such as settlement of a trustee’s accounting or a settlement agreement.

13.12.205 - Decedent’s nonprobate transfers to others.

COMMENTARY: 2010 amendment excludes DAPTs from augmented estate.

13.12.530-.590 - Establishment of Will and Trust Validity Before Death.

COMMENTARY: 2010 amendment establishing pre-mortem probate and trust validity procedures.

13.12.720 - Family-owned business deduction.

13.16.055(a)

COMMENTARY: 2010 amendment establishes venue for probate of nonresident decedent.

13.16.560 - Distribution in kind; valuation; method.

13.16.680 - Collection of personal property by affidavit.

COMMENTARY: Affidavit procedure for estates less than $50,000.

13.33.101 - Nonprobate transfers on death.

COMMENTARY: Subsection (d) provides that life insurance and retirement benefits are not subject to the debts of the insured or the participant no matter to whom the proceeds are paid, including the estate.

13.36.035(c) - Court jurisdiction; choice of law.

COMMENTARY: Contacts necessary for Alaska law to apply; a key DAPT statute.

13.36.043 - Change of situs to Alaska.

Various Uniform Trust Act provisions:

  • 13.36.055 - Proceedings for review of employment of agents and review of                    compensation of trustee and employees of trust.
  • 13.36.071 - Accepting or rejecting trusteeship.
  • 13.36.072 - Co-trustees.
  • 13.36.073 - Vacancy in trusteeship; appointment of successor.
  • 13.36.074 - Resignation of trustee.
  • 13.36.076 - Removal of trustee.
  • 13.36.077 - Delivery of property by former trustee.
  • 13.36.078 - Reimbursement of expenses.
  • 13.36.105 - Powers attached to the office of trustee.
  • 13.36.107 - General powers; fiduciary duties.
  • 13.36.109 - Specific powers of trustees.
  • 13.36.110 - Liability of trustee relating to exercise of power.
  • 13.36.120 - Voting of corporate stock owned by trustee.
  • 13.36.125 - Creation of trust bank account to pay special debts.
  • 13.36.130 - Failure of beneficiary to present claim for payment.
  • 13.36.135 - Holding stock in name of nominee.
  • 13.36.140 - Loan of trust funds.
  • 13.36.145 - Corporate trustee depositing trust funds with itself.
  • 13.36.150 - Trustee buying from or selling to itself.
  • 13.36.155 - Permitted sales between trusts held by same corporate trustee.
  • 13.36.160 - Corporate trustee buying its own stock.
  • 13.36.165 - Withdrawals from mingled trust funds.
  • 13.36.170 - Unenforceable oral trust created by deed.
  • 13.36.175 - Action on contract against trustee in representative capacity.
  • 13.36.180 - Exoneration or reimbursement for tort.
  • 13.36.185 - Tort liability of trust.
  • 13.36.190 - Personal liability for tort committed by trustee.
  • 13.36.192 - Power of settlor of trust.
  • 13.36.194 - Power of beneficiary of trust.
  • 13.36.196 - Relieving trustee of duties; power of the court.
  • 13.36.198 - Liability for violations.

13.36.072(c) - A trustee excluded from a certain power is not liable for following the direction of a co-trustee who holds that power.

COMMENTARY: 2013 amendment. This is Alaska’s directed trustee provision, which clarifies and expands the existing provision.

13.36.079 - Certification of trust; penalty.

13.36.080 - Duty to inform and account to beneficiaries.

COMMENTARY: Includes exemptions from notice requirement while settlor is alive.

13.36.100 - Limitations on proceedings against trustees.

13.36.109 - Specific powers of trustees.

COMMENTARY: 2010 amendment allows trustees to consider distributions as being made from capital gains.

13.36.110 - Liability of trustee relating to exercise of power.

13.36.153 - Restrictions on exercising certain trustee powers.

COMMENTARY: Trustee tax savings provision.

13.36.157 - Trustee's special power to appoint to other trust.

COMMENTARY: Trustee’s decanting power. 2013 amendments completely rewrote Alaska’s decanting authority. See also AS 13.36.158 and .159, below.

13.36.158 - Additional provisions relating to exercise of power of appointment.

COMMENTARY: These are additional provisions relating to Alaska’s decanting authority which were added by 2013 amendments.

13.36.159 - Implementation of power of appointment.

COMMENTARY: 2013 amendments added these procedural provisions for implementation of the decanting power. See AS 13.36.215 which contains definitions relating to the decanting authority.

13.36.169 - Elections to qualify property for marital deduction and generation-skipping transfer tax allocations.

13.36.215(b) - Definitions relating to decanting authority.

COMMENTARY: 2013 amendments added these definitions relating to the decanting authority.

13.36.225-.285 - Uniform Prudent Investor Act.

13.36.273 - Trustee duties relating to insurance.

COMMENTARY: 2013 amendments exculpate trustee of life insurance trust. These protective provisions only apply if the trust instrument expressly adopts them. With respect to existing trusts, these protective provisions can apply if the trustee notifies all the beneficiaries and they do not object within 30 days.

13.36.310 - Challenges to trusts.

COMMENTARY: DAPT claims protected.

13.36.320 - Nonqualified persons serving as trustees.

13.36.330 - Penalty clause.

COMMENTARY: Incontestability clause enforceable even if probable cause exists for instituting the proceedings.

13.36.335 - Application of special distribution provisions.

COMMENTARY: Distribution provisions relating to administration of estates also apply to administration of revocable trusts.

13.36.338 - Presumption of revocability.

13.36.340 - Modification and revocation of revocable trusts.

13.36.345 - Modification or termination of irrevocable trusts because of unanticipated circumstances.

13.36.350 - Reformation to correct mistakes in irrevocable trusts.

13.36.355 - Construction of trust to achieve settlor's tax objectives.

13.36.360 - Modification or termination of irrevocable trust by consent.

13.36.365 - Uneconomical irrevocable trust.

13.36.368 - Claims against revocable trusts.

COMMENTARY: Provides a claim procedure for revocable trusts similar to the procedure for the administration of estates.

13.36.370 - Trust protector.

COMMENTARY: 2013 amendments eliminate requirement that trust protector be a disinterested third party.

13.36.375 - Trustee advisor.

COMMENTARY: 2013 amendments expand and clarify that if the trust instrument directs the trustee to follow the advice of a trust advisor then the trustee will not be liable. The advisor becomes a fiduciary who must account to the beneficiaries.

13.36.390(2) - Definitions: Qualified Person.

COMMENTARY: Requirements for Alaska trustee.

13.38.200-.990 - Alaska Principal and Income Act.

COMMENTARY: This is Alaska’s version of the Uniform Principal and Income Act. It was updated in 2003 to allow for the power to adjust and for conversion to a unitrust. 2013 amendments provide a trustee with discretion to choose a unitrust percentage between three and five percent, to choose an averaging period for valuing assets between three and five years, and to appoint an independent trustee to exercise conversion powers. Also, the 2013 amendments provide authority for initially creating an Express Total Return Unitrust and to apply the unitrust concept to retirement benefits. A trustee may treat gains as part of the distribution of principal. The Act also includes a Marital deduction savings clause.

13.46.010-.990 - Alaska Uniform Transfers to Minors Act.

COMMENTARY: 2013 amendments allow for extensions beyond the age of 25 years as long as the minor has given notice and has the right to compel outright distribution at the original age for distribution and any extended dates.

13.70.010-.195 - Uniform Disclaimer of Property Interests Act.

COMMENTARY: Uniform Disclaimer of Property Interests Act with various Alaska changes.

13.70.110 - When disclaimer permitted, barred, or limited.

COMMENTARY: Disclaimer permitted even though disclaimant is insolvent.

13.75.010 - .195 - Disposition of Human Remains.

COMMENTARY: 2013 amendments enacted this new act which allows a person to designate who will make disposition decisions and to provide for directions for the disposition of the person’s remains. A form document is provided.

Title 14: Education, Libraries, and Museums

14.40.802 - Alaska Higher Education Savings Trust

COMMENTARY: Alaska’s section 529 plan provisions.

Title 21: Insurance

21.09.210 - Tax

COMMENTARY: Excess premium tax on life insurance.

21.42.020 - Insurable Interest

COMMENTARY: 2013 amendments clarify that a trustee of a life insurance trust has an insurable interest and that a person who has an insurable interest in an individual may form a business firm (corporation, limited liability company, partnership) for the purpose of owning the insurance.

Title 32: Partnership

32.11.010-.990 - Alaska Revised Limited Partnership Act.

The following provisions are designed to maximize tax benefits and creditor protection for limited partnerships:

32.11.340 - Rights of creditor.

COMMENTARY: Charging order is only remedy of a creditor of a limited partner. 2013 amendments clarify that excluded remedies include both legal and equitable remedies.

Title 34: Property

34.25.055 - Conveyances to or from trusts.

34.27.051 - Statutory rule against perpetuities.

COMMENTARY: 1,000 year perpetuities provision.

34.27.053 - Savings provision.

34.27.070 - Application.

34.27.075 - Relationship to common law rule.

34.27.100 - Suspension of the power of alienation.

34.40.110 - Restricting transfers of trust interests.

COMMENTARY: Spendthrift trust provision; a key DAPT statute.

34.40.110(b)

COMMENTARY: 2010 amendment clarified burden of proof; DAPT settlor can remove and replace trustees and trust protector; DAPT can be governed by a standard or absolute discretion; DAPT trustee can reimburse settlor for income tax. 2013 amendment added that a lifetime non-general power of appointment was not included in the phrase “revoke or terminate”. The purpose of this amendment was to facilitate obtaining Private Letter Rulings for non-grantor trusts.

34.40.110(l) - Divorce: protection of beneficiary's interest in trust.

34.40.113 - Discretionary interest in an irrevocable trust.

COMMENTARY: 2013 amendments added this section which provides that a creditor may not force a trustee to make a distribution and that a trustee may directly pay expenses of the beneficiary. In addition, the amendment clarifies that a beneficiary’s discretionary interest in an irrevocable trust is an expectancy that a creditor of a beneficiary may not attach or otherwise reach.

34.40.115 - Subjecting appointed property to claims of donee's creditor.

COMMENTARY: Generally, property that donee of a power of appointment is authorized to appoint is not subject to the claims of creditors of the donee.

34.40.118 - Transfers of individual retirement accounts.

COMMENTARY: 2013 amendments allow a person to voluntarily transfer or assign the person’s interest in an IRA.

34.77.010 - .995 - Alaska Community Property Act.

  • 34.77.030 - Classification of property of spouses.
  • 34.77.060 - Certain property transactions between spouses.
  • 34.77.070 - Obligations of spouses.

    COMMENTARY: An obligation of only one spouse may be satisfied from only that spouse’s one-half of the community property. How to opt-in to Alaska’s community property system.

  • 34.77.090 - Community property agreement.
  • 34.77.100 - Community property trust.
  • 34.77.110 - Forms of holding property.

    COMMENTARY: 2013 amendments clarify that if spouses opt into Alaska’s community property system, the designated property is community property regardless of the form of title. Further, if title provides for survivorship then the survivorship feature is presumed to have been made with the consent of both spouses. If the type of property allows for a beneficiary designation, and only one spouse designates the beneficiary, then the designation is effective only for that one spouse’s one-half interest. However, if the beneficiary designation is the other spouse, an ancestor or descendant of the spouse making the designation, or a charity, then it is presumed made with the consent of the other spouse. Presumptions can be overcome by the testimony of one spouse.

  • 34.77.140 - Interspousal remedies.

    COMMENTARY: 2013 amendments provide specific limitation periods during which gifts by one spouse can be challenged.

  • 34.77.155 - Division of community property at death.

    COMMENTARY: Aggregate system; non-pro rata division allowed.