Article: 3
  In 1998, the Alaska legislature enacted additional provisions to support the creation of Alaska self-settled spendthrift trusts. This article analyzes these new provisions as well as a recent letter ruling addressing planning with Alaska trusts.
David G. Shaftel, 1999 © All Rights Reserved.

To understand Alaska's 1998 legislation, it is helpful first to review briefly the previous year's enactments. In 1997, the Alaska legislature decided to embark on a program to establish Alaska as a center for the situs and administration of trusts.1 The legislature's efforts focused on expressly authorizing self-settled spendthrift trusts and marketing them to nonresidents as a substitute for offshore assets protection trusts. Concurrently, the legislaure abolished the rule against perpetuities. The following paragraphs summarize the 1997 provisions.

1997 Alaska Legislation.

Self-settled Spendthrift Trusts. In a self-settled spendthrift (discretionary) trust, the settlor is a discretionary beneficiary of a trust that contains a spendthrift provision prohibiting the beneficiary's creditors from reaching the trust assets. Prior to 1997, almost all states had either statutory provisions or case law which stated that the spendthrift provisions of such trusts would not be enforced. This position was justified by the argument that "It is against public policy to permit the owner of property to create for his own benefit an interest in that property that cannot be reached by his creditors."2

In 1997, the Alaska legislature decided to reverse this public policy and enacted statutes authorizing the enforcement of spendthrift clauses in self-settled trusts. If the trust is drafted to meet the legislative requirements, then under Alaska law the settlor's creditors cannot reach the trust's assets, even though such assets could be discretionarily distributed to the settlor.3

The Alaska Statutes provide certain exceptions to the asset protection concept. A creditor can reach a trust's assets in the following situations:
  1. The transfer was intended in whole or in part to hinder, delay, or defraud creditors or other persons under AS 34.40.010;
  2. The trust provides that the settlor may revoke or terminate all or part of the trust; 4
  3. The trust requires that all or a part of the trust's income or principal, or both, must be distributed to the settlor; or
  4. At the time of the transfer, the settlor was in default by 30 or more days of making a payment due under a child support judgement or order.5

The new legislation included a statute of limitations which provided that a person - who is a creditor when the trust is created - may not bring an action with respect to a claim unless the action is brought within the later of (1) four years after the transfer to the trust is made, or (2) one year after the transfer to the trust is, or reasonably could have been discovered by the creditor.6 If the person became a creditor subsequent to the transfer of the trust, the action must be brought within four years after the transfer is made.7

Abolition of the Rule Against Perpetuities. The 1997 Alaska legislature wrestled with complete abolition of the rule against perpetuities, and then backed off a "hair." This was the result of conflicting expert opinion as to the desirability of maintaining the rule. Alaska Statute 34.27.050 provides, in part, that a nonvested property interest is invalid unless "the interest is in a trust and all or part of the income or principal of the trust may be distributed, in the discretion of the trustee, to a person who is living when the trust is created." For all practical purposes, this compromise language abolished the rule in Alaska. Therefore, Alaska joins Arizona, Delaware, Idaho, Illinois, Maryland, South Dakota, and Wisconsin as a state that has abolished the rule against perpetuities.8

Use of Alaska Trusts by Nonresidents. The framers of the new statutory trust provisions considered that persons located outside Alaska may well be interested in using Alaska self-settled spendthrift trusts or perpetual trusts. Consequently, they enacted statutory requirements which the framers thought would provide an adequate Alaska nexus so that Alaska law would apply to the trust.

Some or all of the trust assets must be deposited in Alaska and administered by a "qualified person," who is either an individual who is an Alaska resident, or an Alaska trust company or bank.9 The powers of the Alaska trustee include or are limited to maintaining records for the trust on an exclusive basis or nonexclusive basis, and preparing or arranging for the preparation of, on an exclusive basis or nonexclusive basis, an income tax return that must be filed by the trust.10 Part or all of the trust administration is to occur in Alaska, including physically maintaining trust records in the state.

The drafters of this language have informally explained that it was intended to be a safe harbor. That is, a trust can fail to contain one or more of these provisions and arguably still have an adequate Alaska nexus and hence be governed by Alaska law.11 The contention that nonresidents may design their trusts so that Alaska law applies is based on section 273(b) of the Restatement (Second) of Conflict of Law (1971).

New 1998 Legislation Facilitating Alaska Trusts.

Change of a Trust's Situs to Alaska. The purpose of this provision is to assist with the change of situs to Alaska of a trust created in another jurisdiction that does not have law as favorable as Alaska's. Some or all of the trust assets must be deposited in Alaska; at least one trustee must be an Alaska trustee; and the trust must be registered under Alaska law. Once the situs is changed to Alaska, proponents argue that Alaska's asset protection and perpetual trust provisions will apply. The legislative history explains that a settlor who is unhappy with the developments in the law or the administration of an offshore trust, or a trust created under the laws of another state, may move the trust to Alaska.12

Existing Trust's Special Power of Appointment May Create an Alaska Trust. This statute is designed to allow the conversion of an existing trust (for example, a trust moved to Alaska pursuant to the above provision) to an Alaska trust. This may be necessary if the trust does not contain appropriate asset protection or perpetual trust provisions.

Pursuant to this new statute, such conversion can occur if the trustee has absolute discretion under the terms of the testamentary instrument or irrevocable inter vivos agreement to invade the principal of a trust for a beneficiary who is eligible or entitled to the income of the trust. Such a trustee may appoint part or all of the trust principal in favor of a trustee of a new Alaska trust, as long as such appointment does not reduce any fixed income interest of any beneficiary, and is in favor of the beneficiary of the trust. The exercise of the power is stated to be "considered to be the exercise of a special power of appointment."13

Planners weighing the use of this new provision should analyze whether the proposed conversion will inadvertently trigger the "Delaware Tax Trap" of Code Section 2514(d).14 If the holder of the power described in the Alaska statute creates a new trust and a beneficiary of the trust is given a nongeneral power of appointment (as is frequently done with perpetual trusts) that can be exercised "so as to postpone the vesting of any estate or interest in the property...for a period ascertainable without regard to the date of creation of the first power,"15 then Section 2514(d) would appear to apply and the conversion would be a taxable event under the federal gift tax.16

If the trust has a choice of law provision, this may also inhibit the conversion to an Alaska trust. Would the initial selection of state law other than Alaska overrule the Alaska law authorizing the power to convert?17

Non-Alaskans May Serve as Co-trustee's. Concerns have existed about whether an Alaska trustee may properly defer to the actions of a non-Alaska trustee with respect to the administration of an Alaska trust. The new statute provides that as long as there is at least one Alaska trustee, then the non-Alaska individual's, trust companies, and banks may serve as co-trustee and will not be considered to be doing business in Alaska.18

Prohibition of Cause of Action for Conspiracy to Defraud. Attorneys who have contemplated assisting with the formation of Alaska self-settled spendthrift trusts, and potential trustee's of such trusts, have expressed concerns that if the trust successfully prevented creditors from reaching its assets, the creditors might turn on the professionals involved in the creation and operation of the trust. In effect, your client may have succeeded in "passing the baton" to you!

The new statute prohibits a creditor from asserting any cause of action against a trustee of the trust or against others involved in the preparation or funding of the trust for conspiracy to commit a fraudulent conveyance, aiding and abetting a fraudulent conveyance, or participation in the trust transaction. The creditor who is prevented from asserting a cause of action is limited to recourse against the trust assets and the settlor to the extent allowed under the statute.19

Trustee's First Lien for Costs and Attorney Fees. Certain transfers to Alaska trusts may be capable of being set aside, if timely challenged. An example would be a transfer that was intended to defraud creditors. In such a case the new statute provides that such transfers will be set aside only to the extent necessary to satisfy the creditor's claim. Further, the trustee will have a prior lien on the trust assets equal to the costs and attorney's fees properly incurred by the trustee in defending the action. Moreover, a beneficiary may retain any distributions made prior to the commencement of the action to set aside the transfer.20

Statute of Limitations Clarified. The applicable four-year statute of limitations (alternatively, one year after reasonable discovery of the transfer to the trust) has been clarified to state that the cause of the action, rather than just the remedy, is extinguished if a timely action is not brought.21 The language is patterned after the statute of limitations of the Uniform Fraudulent Transfer Act.22 The purpose of this change is to increase the probability that a non-Alaska forum will choose to apply the Alaska statute of limitations rather than its own.23

Additional New 1998 Trust Legislation.

In addition to the above provisions designed to support self-settled spendthrift trusts, the Alaska legislature enacted the following new trust provisions.

Trust Incontestability Clauses. Existing Alaska law provides that a clause in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate (i.e., a no-contest clause) is unenforceable if probable cause exists for instituting proceedings.24 Alaska has now taken a different approach with respect to trusts.

The new statute states that "a provision in an inter vivos or testamentary trust purporting to penalize a beneficiary by charging the beneficiary's interest in the trust, or to penalize the beneficiary in another manner, for instituting a proceeding to challenge the acts of the trustee or other fiduciary of a trust, or for instituting other proceedings relating to the trust, is enforceable even if probable cause exists for instituting the proceedings."25

Certain Appreciation Treated as Income. This statute provides that "an increase in value of the following above inventory is distributable as income:" A zero coupon bond; an annuity contract before annuitization; a life insurance contract before death; an interest in a common trust fund; an interest in a limited liability company, limited liability partnership, or a limited partnership; and another obligation for the payment of money.26 The framers have informally explained that this section was designed to provide state law support for allowing such appreciation in value to be treated as "income" of charitable remainder trusts (and thereby inure to the benefit of the non-charitable beneficiaries). Planners desiring to take advantage of this provision may want to include a similar definition of income in the trust instrument.

Alaska Uniform Prudent Investor Act. Alaska becomes the 17th state to adopt the Uniform Prudent Investor Act, which was drafted in 1994.27 This Act states that the prudent investor rule will be a default rule, which may be expanded, restricted, eliminated, or otherwise altered by the settlor in the trust instrument.28

Uniform trustee's Powers Act. Alaska statutes have been silent concerning the default powers of a trustee. Adoption of a portion of the Uniform Trustees Powers Act now provides default powers, which may be limited or added to by the terms of the trust instrument.29 The Uniform Trustees Powers Act was drafted in 1964, and has been adopted by 16 other states.30

Uniform Trusts Act. This Uniform Act was promulgated in 1937 and has been adopted by six states and one territory.31 With some changes, Alaska has now adopted this Act, which sets forth various administration guidelines for trustee's. In addition, the Act provides notice requirements for bringing contract and tort actions against a trust, and rules for determining when the trustee will also be liable for judgements.32

The above-described adopted Uniform Trustees Powers Act and Uniform Trusts Act are now entitled the "Alaska Trusts Act."33

Choice of Law for Wills and Intestate Estates. This provision was copied from the New York statute popularly known as the "Foreign Executed Wills Act."34 The New York Commentary explains that the increasing mobility of society - with frequent changes in the domiciliary nexus of persons - and the diffusion of business interests and property over numerous jurisdictions was the motivation for this Act. It is designed to concentrate "in one section all choice-of-law rules regulating intestate distributions and dispositions and exercises of powers of appointment by wills, which, aside from their relation to this state, are in some essential way related to another jurisdiction."35

New Alaska Community Property System.

The 1998 Alaska legislature enacted a community property system (The Alaska Community Property Act)36 based in part on the Uniform Marital Property Act.37 To participate in this community property system, however, couple's must "elect in," partially or completely. For example, a couple may elect to have only certain assets characterized as Alaska community property.38 Alaska residents can so characterize their property by executing an Alaska community property agreement or trust.39 The legislation makes clear that non-residents of Alaska can so characterize some of their property as Alaska community property by executing an Alaska community property trust.40

One of the stated goals of this legislation is to allow couple's, whether residents or non-residents of Alaska, to obtain a full adjustment (i.e., a full step-up) in the basis of the community property upon the death of the first spouse to die.41 The Alaska Community Property Act will be analyzed in detail in the next issue of Estate Planning.

Reduction of State Tax on Life Insurance Premiums. Alaska's 2.7% tax on life insurance premiums was modified to reduce the percentage to 0.1% on premium amounts in excess of $100,000. This reduction was intended by the legislature to attract trusts containing large variable life policies to Alaska.42

Effective Dates. The Alaska Uniform Prudent Investor Act took effect on 5/23/98. This Act applies to trusts existing on, or created after, the effective date. As applied to trusts existing on the effective date, the Act governs only decisions or actions occurring after that date. The Alaska Community Property Act also became effective 5/23/98. The reduction of tax on life insurance premiums took effect on 6/26/98.

The effective date of the other provisions discussed above is 9/15/98. In general, these provisions apply only to (1) testamentary trusts created by wills, or codicils, of persons dying on or after the effective date; (2) nontestamentary trusts created on or after the effective date; and (3) testamentary or nontestamentary trusts that are registered or re-registered after the effective date if the registrations specify that the trusts will be governed by these provisions.

Update on Gift and Estate Planning with Alaska Trusts.

In states that have a statutory or case law policy against self-settled spendthrift trusts, the settlor's transfers to such trusts will not be "completed gifts." This conclusion is based on the following reasoning. If the settlor is a discretionary beneficiary, the settlor's creditors can reach the maximum that could be distributed to the settlor, and in many instances this would be all the assets of the trust. As a result, the settlor could "run up" debts, and the settlor's creditors could reach the trust assets to satisfy these obligations. Another way of looking at this situation is that the settlor, indirectly, has retained the ability to reach the assets of the trust through incurring debts.

Reg. 25.2511-2(b) provides that a gift is complete if the donor "has so parted with dominion and control as to leave in him no power to change its disposition, whether for his own benefit or for the benefit of another...." The above reasoning illustrates that this test of the Regulation is not satisfied by self-settled spendthrift trusts in most states.

In Alaska, though, the settlor's creditors cannot reach the assets of the trust. Therefore, the settlor's ability to incur debts does not give the settlor "dominion and control" over the trust assets. Accordingly, the proponents of Alaska self-settled spendthrift trusts have argued that the settlor's transfers to such trusts are completed gifts.43 Further, the proponents contend that none of the inclusion provisions of the federal estate tax apply to the completed gift assets in an Alaska self-settled spendthrift trust. As a result, the trust assets should be excluded from the settlor's gross estate.44

If the proponents are correct, Alaska self-settled discretionary spendthrift trusts become a very attractive gift giving vehicle for a certain group of donors. These are donors who would benefit from substantial annual exclusion and applicable credit gifts, but who also worry that, in the future, they might need the assets given away. The proponents argue that under an Alaska self-settled spendthrift trust, such a donor could make completed gifts, keep the trust principal and its appreciation out of the donor's gross estate, and still be a beneficiary to whom the trustee could make discretionary distributions if the need arises.

Ltr. Rul. 9837007. Soon after the 1997 legislation was passed, several Alaska practitioners suggested that a request for a private letter ruling be submitted to the IRS to test the above-described gift and estate tax concepts.45 An Alaska resident, who was interested in forming a basic "plain vanilla" Alaska self-settled spendthrift trust, applied for a ruling. The trust would be created for the benefit of the settlor and her descendants. There would be only one trustee, and this trustee would be completely independent.

The trust would provide that "Trustee is to pay during the Donor's lifetime, any part or all of the income and/or principal in such amounts and at such times as the Trustee in its sole and absolute discretion determines, among one or more of the class consisting of the Donor and the Donor's living descendants." Upon the donor's death, the principal of the trust would be divided into separate trusts, one for each surviving child of the donor. The donor would not be given the power to remove or replace the trustee or to appoint a successor trustee.

The applicant for the letter ruling represented that "there is no agreement, express or implied, between the donor and the Trustee as to how Trustee will exercise its sole and absolute discretion to pay income and principal among the beneficiaries." The donor proposed to fund the trust with cash, securities, and/or undeveloped land located in Alaska.

The donor made two ruling requests: (1) that the "Transfer To the Trust Is A Complete Gift" and (2) that the "Trust Is Not Includable In Grantor's Estate." The IRS in Ltr. Rul. 9837007 ruled favorably that the transfer was a completed gift. The Service conditioned this conclusion "on the representation that there is no express or implied agreement between the Donor and the Trustee."

In support of her position that the trust not be includable in her estate, the donor in her ruling request argued, in part:

Property transferred for less than full and adequate consideration prior to death is includable in the transferror's estate under Code Section 2036(a)(1) if the transferor retained the possession or enjoyment of, or the right to the income from, the property, or under Code Section 2036(a)(2) the right to designate the person who shall possess or enjoy the property or the income therefrom. Similar in some ways to Code Section 2036(a)(2), property transferred prior to death is includable in the transferor's estate under Code Section 2038(a) if the transferor held at death the power to alter, amend, revoke or terminate the transfer. Even though Mrs. _____ will not retain the possession or enjoyment of, or the right to the income from, the property, or the power to alter, revoke, amend or terminate the transfer, if Mrs. ____'s creditors could attach the trust assets (e.g., she could incur debt and relegate her creditors to the trust property), the property would be includable in her estate under Code Section 2038 and possibly Code Section 2036. Rev. Rul. 76-103, supra, Rev. Rul. 77-378, supra Paolozzi v. Commissioner, 23 T.C. 182 (1954), acq. 1962-1 CB4. However, as explained earlier, Mrs. ____'s creditors will not be able to attach the trust assets. Therefore, the trust will not be includible in her estate under Code Section 2036 or 2038. Private Letter Ruling 9332006 Estate of German v. United States, 85-1 USTC §13,610 (Ct. Cl. 1985) (Maryland law); cf. Estate of Uhl v. United States, 241 F.2d 867 (7th Cir. 1957) (Indiana law).

In response, the Service in Ltr. Rul. 9837007 declined to rule, stating:

We are expressly not ruling on whether the assets held under the Trust agreement at the time of Donor's death will be includable in Donor's gross estate for federal estate tax purposes.

Counsel representing the donor reported that the Service's representatives first explained that the refusal to rule was based on the fact that, at present, inclusion in the donor's estate was a "hypothetical situation." The donor's counsel also reported that the Service representative admitted, informally, that for public policy reasons the Service "merely was not going to rule" on this issue.46

Alternative Reasons for Refusing to Rule. An alternative, and perhaps fairer, explanation by the Service for declining to rule would be that inclusion of the trust assets in the donor's gross estate will depend on the facts and circumstances of the operation of the trust during the donor's lifetime. For example, these facts and circumstances conceivably could establish the existence of an express implied agreement between the donor and the trustee, which could trigger Section 2036.47

A refusal to rule based on such possible future events would be rational and fair. On the other hand, such grounds for refusal would also indicate that if the "facts and circumstances" test failed to establish an express or implied agreement, then this gift and estate tax planning concept would work.48 The Service representative's informal comments indicate that the Service is resisting such encouragement.

Another ground for refusing to rule favorably would be that the settlor's inclusion of herself as a discretionary beneficiary of the trust is a "retention" of the enjoyment of the property under Section 2036(a).49 This interpretation of Section 2036(a) seems strained. It would appear that an amendment to Section 2032(a) would be necessary before that section would apply to a self-settled spendthrift trust where distributions to the settlor are subject to the sole and absolute discretion of an independent trustee.

A Strategy. The following strategy has been suggested for planners who are concerned that the settlor's retention of a beneficial interest may result in the inclusion of the trust assets in the settlor's gross estate.

  1. Prior to three years before death (to avoid the three-year rule of Code Section 2035), the settlor could renounce the settlor's beneficial interest. The trust instrument should expressly authorize such renunciation.
  2. Alternatively, third parties, such as a trustee, the beneficiaries, or the trust protector, or several of such persons, could be authorized to eliminate the settlor as a beneficiary of the trust. Such elimination, even though within three years of the settlor's death, would not appear to fall within Section 2035.
  3. Either 1 or 2, above, could be conditioned on an external event, such as the settlor's reaching a certain age, or the settlor's health deteriorating.50

The Underlying Spendthrift Discretionary Trust Premise Must Exist. The positions supporting completed gift treatment and estate tax exclusion depend on the premise that the settlor's creditors cannot reach the assets in the trust. The Alaska statute provides initial firm footing for this premise. But the planner needs to analyze carefully the statutory exceptions with respect to the client's fact situation. If the client is not an Alaska resident, then the conflict of laws issue and the other issues raised by commentators must be examined.51

Upside/Downside analysis. The first question to be addressed is who should consider planning with Alaska trusts. This planning technique makes the most sense for clients who fit the following profile: (1) they have a potential estate tax problem that would be partially alleviated by making gifts that use the annual exclusion amount and applicable credit amount, and (2) the clients are also concerned that if their economic fortunes drastically change, they may need access to the funds given away. Therefore, we can exclude very wealthy clients who can afford such gift giving without any realistic concerns about needing the assets in the future.

What if the Planning Fails and the Trust Assets are Included in the Client's Gross Estate?52 The consequences to the settlor would be inclusion of the assets contributed to the trust, and their appreciation in value, in the settlor's gross estate. This is no different from what would have happened if the settlor had done nothing. The settlor retains the use of the applicable credit amount that was originally allocated to the gift to the trust.53 The settlor has lost the cost of creating and maintaining the trust.

What if the settlor made attempted completed gifts that were larger than the settlor's applicable credit amount and, as a result, the settlor paid out-of-pocket gift tax? In addition to the above consequences, the settlor would have lost the use of the out-of-pocket tax amount paid during his lifetime. Moreover, if the federal gift and estate taxes are repealed in the future, the gift taxes paid would be lost.

The main downside would appear to be that the settlor has lost the opportunity to do some different planning with that portion of the settlor's applicable credit amount. Would the settlor have done so? Perhaps this is the key question for the estate planner.


In order to support and expand Alaska's financial industry, the Alaska legislature has devoted considerable efforts in the last two years to enact favorable trust administration provisions. Further, the legislature has demonstrated a willingness to push the "edge of the envelope" by enacting several new and imaginative trust planning concepts. This legislative activism and boldness is characteristic of our country's "Last Frontier."

1Sponsor Statement for House Bill 101, 1997 Alaska legislature.

2Scott and Fratcher, The Law of Trusts, §156, at p.168 (4th ed., 1989).

3Alaska Statutes 34.40.110 and 34.40.310.

4"...'revoke or terminate' does not include a power to veto a distribution from the trust, a testamentary special power of appointment or similar power, or the right to receive a distribution of income, corpus, or both in the discretion of a person, including a trustee, other than the settlor;...." (A.S. 34.40.110(b)(2)).

5A.S. 34.40.110(b).

6A.S. 34.40.110(d)(1).

7A.S. 34.40.110(d)(2). For a detailed analysis of the asset protection issues relating to Alaska trusts, see Blattmachr, Thwaites, and Zaritsky, "New Alaska Trust Act Provides Many Estate Planning Opportunities," 24 ETPL 347 (Oct. 1997); Hompesch, Rothschild, and Blattmachr, "Does the New Alaska Trust Provide an Alternative to the Foreign Trust?," 2 J. Asset Protection 9 (July/Aug. 1997); Giordani and Osborne, "Will the Alaska Trusts Work?," 3 J. Asset Protection 7 (Sept./Oct. 1997); and Manley, "Self-Settled Trusts and Estate Planning," (outline from ACTEC Western Regional Meeting, 1997).

8If a settlor is choosing a state law under which to form a perpetual trust, it may be important to ascertain whether that state will impose income tax on the income of the trust. Some states, such as Alaska and Delaware, do not.

9A.S. 13.36.390(1).

10A.S. 13.36.035(c).

11Compare the language of A.S. 13.36.035(c) with the language of the new Alaska Community Property Act, contained in A.S. 34.75.100(a), which requires certain contacts in order for an Alaska community property trust to be used by nonresidents.

12A.S. 13.36.043; Sponsor Statement for the House Bill 196, 1998 Alaska Legislature.

13A.S. 13.36.157.

14See Cushing, pages 36-37 of outline, "Federal Tax Aspects of Trustee's Powers," presented at ALI-ABA Sophisticated Estate Planning conference, Boston, MA (9/10/98-9/11/98).

15Code Section 2514(d).

16See Blattmachr and Pennell, "Adventures in Generation-Skipping, or How We Learned to Love the "Delaware Tax Trap," 24 Real Prop., Prob. and Tr. J. 75 (Spring 1989).

17Restatement (Second) Conflict of Laws; sections 6 and 270 (1971).

18A.S. 13.36.320.

19A.S. 34.40.110(f).

20A.S. 13.36.310.

21A.S. 31.40.110(d).

227A U.L.A. 639 at 665 (1984).

23See Restatement (Second) Conflict of Laws, section 143 (1971).

24A.S. 13.12.517.

25A.S. 13.36.330.

26A.S. 13.38.060.

27 7B U.L.A. 56 (pocket part 1994).

28A.S. 13.36.200 through A.S. 13.36.275.

29A.S. 13.36.107.

307B U.L.A. 741 (1964).

317B U.L.A. 763 (1937). There is a new Uniform Trusts Act in development.

32A.S. 13.36.110 through A.S. 13.36.210.

33A.S. 13.36.295.

34N.Y. EPTL § 3-5.1.

35Id. Practice Commentary by Patrick J. Rohan, pp. 600, 603.

36New Chapter 75 of Title 34 of the Alaska Statutes.

379A U.L.A. 21 (1983). Only Wisconsin has adopted the Uniform Marital Property Act.

38Alaska is presently the only state with such an elect-in provision. Both Oklahoma and Oregon have experimented with such optional community property systems. (1939 Okla. Sess. Laws Ch. 62, art. 2, §2, repealed in 1945; 1943 Or. Laws ch. 440, §2, repealed in 1945).

39A.S. 34.75.060, A.S. 34.75.090, and A.S. 34.75.100.

40A.S. 34.75.060(b); Sponsor Statement for House Bill 199, 1998 Alaska Legislature.

41Sponsor Statement for House Bill 199, 1998 Alaska Legislature.

42A.S. 21.09.210.

43Blattmachr and Zartisky, "North to Alaska - Estate Planning Under the New Alaska Trust Act," 32 U. Miami Heckerling Inst. on Est. Plan. (1998). See also Vander Weele, 254 F.2d 895, 1 AFTR2d 2138 (CA-6, 1958); Outwin, 76TC 153 (1981).

44For a comprehensive discussion of these issues, see Blattmachr and Zartisky, "North to Alaska - Estate Planning Under the New Alaska Trust Act," supra note 43; Pennell, "1997 Current Estate Planning Developments," The Southern California Tax & Estate Planning Forum (Oct. 1997); Manley, "Self-settled Trusts and Estate Planning," (outline from ACTEC Western Regional Meeting, 1997).

45The following information is taken from a copy of the private letter ruling request provided by the applicant.

46Statement of Jonathan G. Blattmachr during his presentation entitled, "The New Alaska Community Property Act and Other Important Changes That Affect Our Clients," which was given on 8/4/98 at the Alaska CLE Conference.

47Estate of Skinner, 197 F. Supp. 726 8 AFTR2d 6073 (DC Pa., 1961), aff'd 316F.2d 517, 11 AFTR2d 1855 (CA-3, 1963).

48See Estate of Holland, TCM 1997-302; Estate of Kohlsaat, TCM 1997-212.

49See Pennell, "The 'Hottest' 1998 Estate Planning Issues and Topics," The Southern California Tax & Estate Planning Forum (Oct. 1998).

50This strategy was conceived by Jonathan Blattmachr and Gideon Rothschild, and presented at the Alaska CLE conference on 8/4/98.

51See note 7, supra.

52This could happen for a variety of reasons, including the following: trustee selection and control, or a pattern of trust implementation establishes an express or implied agreement, as discussed earlier; the federal bankruptcy code or regulations are amended to establish that Alaska law will not be applied to a nonresident's bankruptcy estate; the state courts of the state where a settlor resides render a future opinion that they will not apply Alaska law to such a trust; or Congress amends Code Section 2036 to include in the settlor's gross estate assets of a self-settled spendthrift trust.

53Code Section 2001(b).