Title XXXIII, Administration of Trusts and Estates of Persons Under Disability

(1) Subject to the statutory provisions of KRS Chapter 396 regarding claims against decedents' estates, whether or not the terms of a trust contain a spendthrift provision, the following rules apply: (a) During the lifetime of the settlor, the property of a revocable trust is sub…

(1) A person that in good faith assists a trustee, or in good faith and for value deals with a trustee, without knowledge that the trustee is exceeding or improperly exercising the trustee's power, is protected from liability as if the trustee properly exercised the power. (2) A …

(1) Subject to KRS 386A.5-010(2), in exercising the powers of trusteeship, a trustee shall act in good faith, on an informed basis, and in a manner the trustee reasonably believes to be in the best interests of the statutory trust. (2) A trustee shall discharge his or her duties …

(1) As used in this section, "mandatory distribution" means a distribution of income or principal which the trustee is required to make to a beneficiary under the terms of the trust, including a distribution on termination of the trust. The term shall not include a distribution s…

Trust property is not subject to personal obligations of the trustee, even if the trustee becomes insolvent or bankrupt.

(1) A trustee, officer, employee, manager, committee of a statutory trust, or other person designated pursuant to KRS 386A.1-030(4)(h) shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared …

(1) Each trustee and each person designated pursuant to KRS 386A.1-030(4)(h) owes a duty of loyalty to the statutory trust and any series thereof, including but not limited to the following: (a) To account to the trust or a series thereof and hold as trustee for it any property, …

A trustee has the right to receive from a statutory trust or another trustee information relating to the affairs of the trust which is reasonably related to the trustee's discharge of the trustee's duties as trustee. The trustee may enforce this right to information by summary pr…

(1) Subject to KRS 386A.1-040(2)(q), a statutory trust may: (a) Indemnify and hold harmless a trustee, beneficial owner, or other person with respect to any claim or demand against the person by reason of the person's relationship with the trust; and (b) Advance expenses, includi…

(1) The governing instrument may authorize any person, including a beneficial owner, to direct a trustee or other person in the management of a statutory trust. (2) If the governing instrument confers on a person a power to direct actions by a trustee or other person, the trustee…

(1) A trustee may delegate duties and powers, including to a co-trustee. The trustee shall exercise the care that a person in a similar position would reasonably believe appropriate under similar circumstances in: (a) Selecting an agent; (b) Establishing the scope and terms of th…

(1) In this section, "affiliated person" and "interested person" have the meanings set forth in the Investment Company Act of 1940, Pub. L. No. 76-768, as amended, or any successor statute and any regulations issued thereunder. (2) If a statutory trust is registered as an investm…

(1) A fiduciary may, with District Court approval, make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from: (a) Elections and decisions, other than those d…

The provisions of KRS 386.450 to 386.504 shall apply to all trusts administered under Kentucky law, except as otherwise specifically provided in the instrument creating the trust, regardless of when created.

KRS 386.450 to 386.504 may be cited as the "Kentucky Principal and Income Act."

As used in KRS 386.510 to 386.590, the following terms shall be construed to have the meaning set forth by this section, unless a contrary meaning clearly appears from the context: (1) The term "trust institution" means any of the following corporations having trust powers and au…

Four (4) or more trust institutions may cause a fiduciary investment company or companies to be organized and incorporated, but no trust institution or foreign trust institution may own an interest in more than seven (7) fiduciary investment companies. A fiduciary investment comp…

Any such fiduciary investment company shall be incorporated under and subject to the provisions of the Kentucky Business Corporation Act. The incorporators shall be persons who are officers or directors of the trust institution or institutions causing such fiduciary investment co…

Trust institutions and foreign trust institutions, as defined by KRS 386.510, acting in a fiduciary capacity and for fiduciary purposes, may, if exercising due care as a prudent investor, and with the consent of any co-fiduciary, invest and reinvest funds held in such fiduciary c…

Every fiduciary investment company in which a trust institution or foreign trust institution is authorized by KRS 386.510 to 386.590 to own and hold corporate stock or shares, in order to qualify for such investments, shall have such corporate powers as may be granted by the Kent…

regulations of comptroller of currency. (1) A fiduciary investment company may acquire, purchase or redeem its own stock and shall, by means of contract or by its bylaws, bind itself to acquire, purchase or redeem its own stock, but it shall not vote shares of its own stock there…

The commissioner of financial institutions shall have authority to adopt and issue reasonable and uniform rules and regulations to govern the conduct and management of all fiduciary investment companies having investment advisers other than national banks. The commissioner of fin…

Except as may be specifically authorized by rule or regulation of the appropriate supervisory agency, no trust institution or foreign trust institution holding stock in a fiduciary investment company may advertise or publicize its participation in such fiduciary investment compan…

No person shall serve or act as investment adviser of a fiduciary investment company except pursuant to a written contract, which contract has been approved by the vote of a majority of the outstanding voting securities of such fiduciary investment company and: (1) Precisely desc…

(1) A beneficial interest in a statutory trust is personal property regardless of the nature of the property of the trust. (2) A beneficial interest in a statutory trust is not an interest in specific property of the statutory trust. (3) A beneficial interest in a statutory trust…

The capacity required to create, amend, revoke, or add property to a revocable trust, or to direct the actions of the trustee of a revocable trust, is the same as that required to make a will.

(1) The vote of all beneficial owners is required for: (a) The amendment of the governing instrument; (b) Compromise of a beneficial owner's obligation to make a contribution to the statutory trust; (c) The conversion of the statutory trust; (d) The merger of the statutory trust;…

(1) Unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke or amend the trust. This subsection shall not apply to a trust created under an instrument signed before July 15, 2014. (2) If a revocable trust is created or funded by more th…

(1) While a trust is revocable: (a) And, in the reasonable belief of the trustee, the settlor has capacity to revoke the trust, rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor; and (b) The trustee may f…

(1) A contribution of a beneficial owner to a statutory trust may be in cash, property, or services rendered or a promissory note or other obligation to contribute cash or property or to perform services. A person may become a beneficial owner of a statutory trust and may receive…

Distribution of trust property. (1) A person may commence a judicial proceeding to contest the validity of a trust that was revocable at the settlor's death within the earlier of: (a) Two (2) years after the settlor's death; or (b) Ninety (90) days after the trustee sent the pers…

(1) Any distribution by a statutory trust before dissolution shall be made in proportion to the beneficial interests. (2) When a beneficial owner becomes entitled to receive a distribution, the trust's indebtedness to a beneficial owner shall be at parity with the trust's indebte…

On the terms set forth in the governing instrument, a statutory trust may acquire, by purchase, redemption, or otherwise, any beneficial interest in the trust, including a beneficial interest associated with a series thereof. A beneficial interest acquired under this section is c…

(1) If a beneficial interest is not freely transferable by a beneficial owner so that the transferee has all rights of the transferor, this section provides the exclusive remedy by which the judgment creditor of a beneficial owner or a transferee of a beneficial owner may satisfy…

Subject to KRS 386A.5-070, a beneficial owner may lend money to, borrow money from, act as a surety, guarantor, or endorser for, guarantee or assume an obligation of, provide collateral for, or do other business with the statutory trust and, subject to law other than this chapter…

(1) Subject to any restriction in the governing instrument and the limitations in subsection (3) of this section, the trustees may authorize and the statutory trust may make distributions to its beneficial owners, including distributions to the beneficial owners associated with a…

(1) A trustee who votes for or assents to a distribution made in violation of KRS 386A.6-080 shall be personally liable to the statutory trust for the amount of the distribution that exceeds what could have been distributed without violating KRS 386A.6-080 if it is established th…

(1) A beneficial owner has the right to receive from the statutory trust or a trustee information relating to the affairs of a statutory trust which is reasonably related to the beneficial owner's interest. (2) A governing instrument may impose reasonable limitations upon the use…

(1) A beneficial owner may maintain a direct action against a statutory trust or a trustee to redress an injury sustained by, or to enforce a duty owed to, the beneficial owner if the beneficial owner can prevail without showing an injury or breach of duty to the trust. (2) A ben…

KRS 386.510 to 386.590 may be cited as the "Fiduciary Investment Company Act."

As used in KRS 386.601 to 386.619, unless the context otherwise requires: (1) "Claim" means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or un…

A qualified affidavit shall state that: (1) The transferor has full right, title, and authority to transfer the assets to the trust; (2) The transfer of the assets to the trust will not render the transferor insolvent; (3) The transferor does not intend to defraud a creditor by t…

(1) Notwithstanding any law to the contrary, including KRS 386B.5-020(7)(a), no action of any kind, including but not limited to an action to enforce a judgment entered by a court or other body having adjudicative authority, shall be brought at law or in equity for an attachment …

A transferor shall only have the powers and rights conferred by the qualified trust. The powers and rights conferred by the qualified trust upon the transferor are personal powers and rights that may not be exercised by a creditor or any other person, except as expressly permitte…

(1) A qualified disposition to a qualified trust shall be avoided only to the extent necessary to satisfy the transferor's debt to the creditor at whose instance the disposition was avoided, together with costs, including attorneys' fees, that the court may allow. (2) In the even…

A spendthrift provision as described in KRS 386.601(11)(c) shall be deemed to be a restriction on the transfer of the transferor's beneficial interest in the trust that is enforceable under applicable nonbankruptcy law within the meaning of 11 U.S.C. sec. 541(c)(2) or any success…