With New Law, Alaska Aiming to Be Trust Capital
Fraser, Katharine, American Banker
Alaska: home to oil pipelines, king crabs, canneries, and trust funds.
A law enacted April 1 is expected to make Alaska the most attractive state for trust funds. Indeed, promoters predicted Alaska would become to estate planning what Delaware is to corporations.
"People with significant assets who were thinking about making a trust offshore may think again," said Jo A. Kuchle, a partner with Cook Schuhmann & Groseclose, a law firm in Fairbanks. "Instead of dealing with a foreign jurisdiction and court system, they would be more comfortable in an American jurisdiction."
Trust and estate law is unique in every state, and there is no federal jurisprudence. To distinguish itself, Alaska removed all limits on the life of a trust established in the state.
The new law also places a deadline-four years-on creditors trying to prove money was fraudulently moved into trust by a debtor.
But the most unusual characteristic of the Alaska law allows an individual to remain a beneficiary of his or her own trust, protecting assets against future creditors.
A prominent New York trust and estate attorney, Jonathan G. Blattmachr, said 90% of his clients are using perpetual trusts.
"Now, I think they'll go and put them in Alaska, especially because it has asset protection," he said.
Mr. Blattmachr, a partner at Milbank, Tweed, Hadley & McCloy, helped the Alaska legislators draft their law.
Alaska is already big on personal liberties. It has no income tax, no sales tax, and no property tax. Its inheritance tax is simply a percentage of what's collected by the federal government. Its only major taxes are levied on corporations. Thus, if trust assets bring a boom to banking, the state will benefit.
"We are trying to be a business-friendly state; we want economic growth," said state Rep. Al Vezey, R-North Pole, who sponsored the bill. "Financial services: It's a classic service industry. And, it's clean and relatively pollution-free."
Why trust and not other financial services?
"We had research that showed large sums of money going over to the Cayman Islands, and asked, 'Why couldn't we do that?'" Rep. Vezey said. "The answer came back: 'We could.'"
Under the law, a trust must be set up through an Alaskan institution or name a resident of the state as a trustee. Anticipating trust assets to move to Alaska, one Montana trust executive packed his bags and headed to Anchorage. …