Alaska Enacts Revised Trust Company Act With Provisions For Private Trust Companies

Article: 16
David G. Shaftel, 2002 © All Rights Reserved.

The Alaska Legislature has completely revised its Trust Company Act. This revision is the executive branch's regulatory response to the legislature's enactment in the past five years of a variety of new trust provisions. These provisions are designed to attract trust administration business to Alaska.

The revised act governs all persons who desire to act as fiduciaries within the State of Alaska. Banks and certain other financial institutions are authorized to act as fiduciaries. Otherwise, a fiduciary must either be a trust company regulated by the act, or a private trust company, or must fit within various exemptions. The exemptions include trustees of only charitable trusts, a person licensed to practice law in Alaska, a person who has a CPA certificate issued under Alaska law, a trustee of a trust created by the trustee's family member, a trustee of a trust created by non-family members as long as such person does not act as non-family trustee for more than ten different settlors, and a conservator, personal representative, or guardian appointed by a court. The department has authority to limit the number of trusts under the attorney and certified public accountant exemptions.

The revised act provides new, express authority for the formation of private trust companies. This exemption was included to respond to requests by wealthy families who desire their own trust company and who want to take advantage of Alaska's new trust laws. The private trust company may only act as fiduciary for trusts created by the family, which is defined as (a) one named individual; (b) a child, grandchild, or great-grandchild of the individual; and (c) a spouse or former spouse of the above-described persons. In order to form an Alaska private trust company, first a corporation, limited liability company, or limited partnership must be created under Alaska law to operate the company. Then, an application must be filed for a private trust company exemption. The private trust company must either have headquarters located in Alaska or must contract with an Alaska bank or trust company to represent the private trust company in Alaska. The Alaska bank or trust company's duties must include maintaining a set of records for each trust, and receiving legal process on behalf of the private trust company.

If a person or entity does not qualify as an authorized bank or financial institution, and does not fit within one of the above-described exemptions, then it must comply with the various provisions of the new restated trust company act. These provisions govern the powers, organization, capitalization, operation, investments, loans, deposits, trust assets, ownership, governance, organic change, dissolution, and liquidation of the trust company. In addition, provisions cover an Interstate State Trust Company, Interstate National Trust Company, and International Trust Company offices.

Alaska's new restated trust company act will take effect on January 1, 2003. The governor signed the act into law on June 20, 2002.