KENTUCKY WILLS AND TRUSTS REQUIREMENTS
Statutory Authority.
Wills:ย Kentucky Revised Statutes, Chapter 394 (KRS ยงยง394.010, et. seq.).
Trusts:ย Kentucky Revised Statutes, Chapter 386B (KRS ยงยง386B.1-010, et. seq.).
Kentucky Will Requirements.
Anyone who is at least 18 years old and of sound mind can make a will in Kentucky.ย A testator is considered to be โof sound mindโ if capable of understanding that a will is being created, the nature of the estate, and identities of the family members who would ordinarily be beneficiaries of the estate.
To constitute a valid will under Kentucky law (other than holographic and nuncupative wills, discussed below), a document must be in writing and signed by the testator (or someone signing for the testator by the testatorโs direction and in the testatorโs presence) and two witnesses.ย The signature of each witness must be made in the presence of the testator and the other witness.ย ย
A Kentucky will witnessed by an interested party (i.e., someone who receives a personal and beneficial interest under the will) is not invalid as a whole, but provisions in favor of the interested witness (or the interested witnessโ spouse) are void.ย An interested witness can receive a share of the estate up to the value he or she would have received had the testator not had a willโexcept that the share cannot exceed what the interested witness would have received under the terms of the will.
Though Kentucky wills need not be notarized, a Kentucky will can be made โself-provedโ through execution by the testator and the willโs witnesses of a notarized affidavit.ย When a will is self-proved, it can be admitted to probate based upon the affidavit and without testimony from witnesses.ย The affidavit may be executed at the same time as the will itself or at a future time.
Within the self-proved affidavit, the testator attests that the document was voluntarily signed and created as a will under the testatorโs own volition while the testator had adequate capacity and was not under any undue influence.ย Witnesses likewise attest that the testator voluntarily executed the will with adequate capacity and while under no undue influence.ย The Kentucky legislature has published a proposed self-proved affidavit form, at KRS ยง394.225.
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Amendment, Revision, and Revocation of Kentucky Wills.
Kentucky wills can be revoked in whole or in part by execution of a later codicil or will that expressly revokes an earlier will.ย Similarly, a will can be revoked by subsequent execution of a document that expressly revokes the earlier will and satisfies legal formalities for execution of a valid will. Revocation may also be accomplished through physical destruction of a will, such as by burning or tearing, with the intention of revoking the will.
A Kentucky will can be amended through execution of a subsequent will or codicil (a later-executed document amending an existing will).ย To constitute a valid codicil, the document must satisfy all formalities required for execution of a valid will.
If a Kentucky testator is divorced after executing a will, any provisions in favor of the former spouse are deemed to have been revoked unless the will expressly provides otherwise.ย Distributions in favor of the former spouse are treated as if the former spouse predeceased the testator.ย Provisions deemed revoked due to divorce are revived if the testator later remarries the same spouse.
If a child is born to or adopted by a testator after execution of a Kentucky willโand if the testatorโs will does not provide for or appear to intentionally omit the childโthe child inherits the same share of the estate the child would have inherited had the testator died intestate.ย However, an afterborn child is not entitled to a statutory share if the testator had at least one other child when making the will and left substantially all of the estate to the afterborn childโs other parentโor if the testator made other arrangements to provide for the child outside the will in lieu of distributions under the will.
Holographic and Oral Wills.
Kentucky law recognizes holographic (or handwritten) wills.ย A document that does not satisfy all requirements for an attested will may be a valid holographic will if it is dated and signed by the testator and all pertinent provisions of the will are written in the testatorโs own handwriting.ย
Kentucky no longer recognizes oral (or โnuncupativeโ) wills.
Kentucky Trust Requirements.
Kentucky law allows for the creation of trusts, a legal relationship under which a property owner (the โsettlorโ) transfers property to a โtrusteeโ for the benefit of a โbeneficiary.โย A single individual may stand in more than role in relation to a Kentucky trust.ย However, the same person cannot be both the sole trustee and sole beneficiary of a Kentucky trust.
Trusts in Kentucky are principally governed by Kentuckyโs version of the Uniform Trust Code, enacted by the legislature at KRS, Chapter 386B.ย A Kentucky trustโs purposes must be lawful, not violate the stateโs public policy, and must be possible to achieve.ย In general, the purpose of a Kentucky trust must be to benefit the interests of the trustโs beneficiaries. A Kentucky trust is invalid to the extent it was induced through fraud, duress, or undue influence.
Kentucky trusts can come into existence through transfer of property by a settlor to a trustee (either during life or through a will or other testamentary instrument), a settlorโs declaration that property is owned as trustee, or by exercising a power of appointment in favor of a trustee.ย
A valid trust is only created under Kentucky law if the settlor has adequate capacity to create the trust and expresses an intent to create a trust. For revocable trusts (i.e., trusts that can be amended or revoked by the settlor), the standard for capacity is the same as for wills.ย Kentucky law assumes that a trust is revocable unless the trust instrument expressly provides that the trust is irrevocable.
A Kentucky trust must have a trustee with actual duties to perform.ย Kentucky trustees have a fiduciary duty to act in good faith and to administer trusts for beneficiariesโ benefit.ย Trustees who manage assets are governed by the โprudent investor rule.โย
Kentucky trusts must also have a reasonably ascertainable beneficiary (subject to exceptions such as for charitable trusts, trusts for the care of animals, and certain trusts for noncharitable purposes).ย ย
Though most trusts are evidenced by a written instrument setting forth the trustโs terms, Kentucky law recognizes oral trusts.ย However, the creation and terms of an oral trust must be established by clear and convincing evidence, and certain types of trusts (such as real estate trusts) must be evidenced by a trust instrument.
In general, creditors of a trustโs beneficiaries may attach a beneficiaryโs interest in a trust. Kentucky law protects beneficiary interests from attachment if a trust includes a โspendthrift provisionโ restricting beneficiariesโ right to transfer interests in the trust, or if distributions are left to the trusteeโs discretion.ย In either case, most creditors of beneficiaries cannot attach trust assets until actually distributed to the relevant beneficiary. However, spendthrift provisions do not prevent attachment for satisfaction of certain domestic support obligations, tax claims, or if the creditor provided necessary services or supplies to the beneficiary (or to the extent a mandatory distribution to the beneficiary is overdue).ย โSelf-settledโ spendthrift trusts (i.e., trusts in which the settlor is also beneficiary) can also be attached by the settlor / beneficiaryโs creditors.
Creditors of a Kentucky revocable trustโs settlor can attach trust assets as long as the settlor remains living (or, upon death, through estate claims).ย In the case of irrevocable trusts, settlorsโ creditors can reach the maximum amount of trust assets that could be distributed to the settlor or for the settlorโs benefit.
Kentucky trusts terminate upon revocation or expiration under the trustโs own terms, when there is no purpose of the trust remaining to be achieved, or when the trustโs purpose becomes unlawful, impossible, or contrary to public policy.ย Under appropriate circumstances, trusts may also be modified or terminated by a court upon the petition of interested parties.ย Unless a trust instrument says otherwise, an irrevocable trust can be modified or terminated outside of court upon the consent of the settlor and all beneficiaries.ย ย
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Estate Taxes:ย Kentucky does not impose any state-level estate tax.ย Large Kentucky estates may still qualify for the federal estate tax.ย Kentucky does, however, assess an inheritance tax from 4% to 16% on property inherited from Kentucky residents (other than real estate owned in another state).ย The amount and applicability of the tax varies according to the relationship between the decedent and heir.ย Close relatives (like the decedentโs spouse, children, siblings, or parents) are exempt from the Kentucky inheritance tax, as are inheritances below $500.ย ย
Simplified Probate:ย Kentucky law provides a streamlined probate process for small estates with assets less than a surviving spouseโs $15,000 spousal exemption (or the spousal exemption plus any โpreferred claimsโ like funeral costs paid by the spouse).ย If an estate qualifies, an individual entitled to receive estate property can usually gain access to the property by completing a Small Estates Claim Form, without going through full probate.
Transfer-On-Death (TOD) Designations:ย Along with living trusts, Kentucky law offers multiple other options for non-probate transfer of assets.ย Assets co-owned as joint tenants with a right of survivorship automatically transfer to a surviving owner upon the other ownerโs death.ย Kentucky also recognizes tenancy by the entireties, another joint ownership form that includes a right of survivorship.ย In Kentucky, tenancy by the entireties can only be used for co-ownership by two spouses and only to own real estate.ย ย
POD (payable-on-death) and TOD (transfer-on-death) designations, which provide for automatic transfer to a beneficiary upon an ownerโs death, can be added to certain assets.ย In Kentucky, POD designations are typically used with bank accounts and CDs, while TOD designations are authorized for stocks, bonds, and brokerage accounts.ย Similarly, beneficiary designations to retirement accounts and life insurance policies allow for transfer of wealth outside probate.ย ย ย
Although some states allow TOD designations on real estate deeds and vehicle titles, Kentucky law does not allow for use of TODs for those assets.
Spousal Shares: Kentucky law protects surviving spouses from disinheritance by guarantying a surviving spouse an elective share in a decedent spouseโs probate estate.ย When a surviving spouse opts for an elective share rather than the share provided under the decedent spouseโs will, the share of the estate received by the surviving spouse is based on what the spouse would have received had the decedent had no will.ย The elective share is generally one-half of personal property and one-third of real estate, subject to a few qualifications. Surviving spouses are also entitled to a spousal exemption of up to $30,000 (recently increased from $15,000) in personal property or cash.
Creating a will or trust does not have to be difficult or intimidating.ย However, certain circumstancesโlike second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)โcan add a layer of complexity and result in unforeseen long-term consequences.ย Whenever any out-of-the-ordinary issues are present, itโs a good idea to consult with an experienced attorney familiar with and licensed under the laws of the relevant jurisdiction.
