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.
Douglas J. Blattmachr, president of the new Alaska Trust Co. and the New York attorney's brother, opened for business April 14 and already has two clients. Alaska Trust is a joint venture of TrustCorp, Great Falls, Mont., and Aleut Corp., an enterprise with native Alaskan shareholders that promotes local business. TrustCorp is affiliated with the regional brokerage D.A. Davidson & Co. and a money manager, Financial Aims Corp.
"If you have any significant wealth, why wouldn't you want to set up a trust in Alaska?" Douglas Blattmachr asked.
But other trust executives are waiting to see how business develops.
"We are cautiously optimistic that this will add to our trust business," said David L. Dobbs, vice president and trust officer of National Bank of Alaska. With $2 billion in trust assets under management, the Anchorage- based bank has roughly half the state's $4.4 billion total.
First National Bank of Anchorage and Key Trust Company of Alaska, a subsidiary of KeyCorp, are the state's two other banks with trust units.
Alaska is looking to outdo other states that have recently made their law more trust-friendly, including South Dakota, Idaho, Wisconsin, Delaware, and Wyoming.
The competition among the states is like the "beauty contest" between offshore jurisdictions like Nevis, the Cook Islands, and the Seychelles that primp their laws to attract financial services business, observed James E. Hughes, a New York trust and estates attorney.
He added the new trust laws are evidence of a private-banking renaissance, but said American states should only expect to get American trusts.
"Alaska has a profound disadvantage of being in the U.S.," he said. Many investors "want to be in international jurisdictions where they are freer from regulations," Mr. Hughes said.
But Jonathan Blattmachr predicted American citizens who have moved billions of dollars, perhaps more than $1 trillion, offshore will now send their money to Alaska.
"If those people are making legitimate transfers, why wouldn't they keep it here?" he said. "There's no stigma, it's safe," and the trust can be perpetual.
No one knows how much money will end up in Alaska trusts, but Jonathan Blattmachr said it should catch on.
But "I could be wrong," he added. "I thought the Edsel was a beautiful car and the pet rock a stupid idea."