Kentucky Wills vs. Trusts
Kentucky estate planning doesn’t have to be a headache. Whether you’re considering a will or trust, understanding the key differences can save your family significant time, money, and stress. This comprehensive wills vs trust guide breaks down Kentucky’s unique laws to help you make the right choice for your legacy.
Table of Contents
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Kentucky Will Requirements
A Kentucky Last Will and Testament should include:
- Age and Capacity: Testator must be “of sound mind” and at least 18 years old
- Sound Mind Definition: 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
- Format: Must be in writing
- Signature: Must be signed by the testator or someone signing for the testator by the testator’s direction and in the testator’s presence
- Witnesses: Must be signed by two witnesses, with each signature made in the presence of the testator and the other witness
Interested Witnesses
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 witness’ spouse) are void
- 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 will—except that the share cannot exceed what the interested witness would have received under the terms of the will
Self-Proved Wills
Though Kentucky wills need not be notarized, a Kentucky will can be made “self-proved” through execution by the testator and the will’s witnesses of a notarized affidavit. When a will is self-proved:
- It can be admitted to probate based upon the affidavit and without testimony from witnesses
- 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 testator’s own volition while the testator had adequate capacity and was not under any undue influence. Witnesses likewise attest that the testator voluntarily executed the will with adequate capacity and while under no undue influence.
The Kentucky legislature has published a proposed self-proved affidavit form, at KRS §394.225.
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Amendment, Revision, and Revocation of Kentucky Wills
Revoking a Kentucky Will
Kentucky wills can be revoked in whole or in part by:
- Execution of a later codicil or will that expressly revokes an earlier will
- Execution of a document that expressly revokes the earlier will and satisfies legal formalities for execution of a valid will
- Physical destruction of a will, such as by burning or tearing, with the intention of revoking the will
Amending a Kentucky Will
A Kentucky will can be amended through:
- Execution of a subsequent will
- Execution of a codicil (a later-executed document amending an existing will)
To constitute a valid codicil, the document must satisfy all formalities required for execution of a valid will.
Automatic Revocation by Divorce
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. Distributions in favor of the former spouse are treated as if the former spouse predeceased the testator.
Provisions deemed revoked due to divorce are revived if the testator later remarries the same spouse.
Children Born After Will Execution
If a child is born to or adopted by a testator after execution of a Kentucky will—and if the testator’s will does not provide for or appear to intentionally omit the child—the child inherits the same share of the estate the child would have inherited had the testator died intestate.
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 child’s other parent, or
- The testator made other arrangements to provide for the child outside the will in lieu of distributions under the will
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Holographic and Oral Wills
Holographic Wills
Kentucky law recognizes holographic (or handwritten) wills. A document that does not satisfy all requirements for an attested will may be a valid holographic will if it is:
- Dated
- Signed by the testator
- All pertinent provisions of the will are written in the testator’s own handwriting
Oral Wills
Kentucky no longer recognizes oral (or “nuncupative”) wills.
Kentucky Trust Requirements
Kentucky law allows for the creation of trusts, a legal relationship under which a property owner (the “settlor”) transfers property to a “trustee” for the benefit of a “beneficiary.” A single individual may stand in more than role in relation to a Kentucky trust. However, the same person cannot be both the sole trustee and sole beneficiary of a Kentucky trust.
Trusts in Kentucky are principally governed by Kentucky’s version of the Uniform Trust Code, enacted by the legislature at KRS, Chapter 386B.
Requirements for a Valid Kentucky Trust
For a trust to be valid under Kentucky law:
- The trust’s purposes must be lawful, not violate the state’s public policy, and must be possible to achieve
- In general, the purpose of a Kentucky trust must be to benefit the interests of the trust’s beneficiaries
- A Kentucky trust is invalid to the extent it was induced through fraud, duress, or undue influence
- The settlor must have adequate capacity to create the trust and express an intent to create a trust (for revocable trusts, the standard for capacity is the same as for wills)
Trust Creation Methods
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 settlor’s declaration that property is owned as trustee
- Exercising a power of appointment in favor of a trustee
Required Trust Elements
A Kentucky trust must have:
- A trustee with actual duties to perform (Kentucky trustees have a fiduciary duty to act in good faith and to administer trusts for beneficiaries’ benefit)
- A reasonably ascertainable beneficiary (subject to exceptions such as for charitable trusts, trusts for the care of animals, and certain trusts for noncharitable purposes)
Trustee Responsibilities
Trustees who manage assets are governed by the “prudent investor rule.”
Oral Trusts
Though most trusts are evidenced by a written instrument setting forth the trust’s terms, Kentucky law recognizes oral trusts. However:
- The creation and terms of an oral trust must be established by clear and convincing evidence
- Certain types of trusts (such as real estate trusts) must be evidenced by a trust instrument
Revocability
Kentucky law assumes that a trust is revocable unless the trust instrument expressly provides that the trust is irrevocable.
Creditor Protection
In general, creditors of a trust’s beneficiaries may attach a beneficiary’s interest in a trust. Kentucky law protects beneficiary interests from attachment if a trust includes a “spendthrift provision” restricting beneficiaries’ right to transfer interests in the trust, or if distributions are left to the trustee’s discretion. 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
- If the creditor provided necessary services or supplies to the beneficiary
- To the extent a mandatory distribution to the beneficiary is overdue
“Self-settled” spendthrift trusts (i.e., trusts in which the settlor is also beneficiary) can also be attached by the settlor / beneficiary’s creditors.
Creditors of a Kentucky revocable trust’s settlor can attach trust assets as long as the settlor remains living (or, upon death, through estate claims). In the case of irrevocable trusts, settlors’ creditors can reach the maximum amount of trust assets that could be distributed to the settlor or for the settlor’s benefit.
Trust Termination
Kentucky trusts terminate upon:
- Revocation or expiration under the trust’s own terms
- When there is no purpose of the trust remaining to be achieved
- When the trust’s purpose becomes unlawful, impossible, or contrary to public policy
Under appropriate circumstances, trusts may also be modified or terminated by a court upon the petition of interested parties. 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.
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Special Considerations
Estate and Inheritance Taxes
No Estate Tax, But Inheritance Tax Applies
Kentucky does not impose any state-level estate tax. Large Kentucky estates may still qualify for the federal estate tax.
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). The amount and applicability of the tax varies according to the relationship between the decedent and heir.
Close relatives (like the decedent’s spouse, children, siblings, or parents) are exempt from the Kentucky inheritance tax, as are inheritances below $500.
Simplified Probate
Kentucky law provides a streamlined probate process for small estates with assets less than a surviving spouse’s $30,000 spousal exemption (or the spousal exemption plus any “preferred claims” like funeral costs paid by the spouse).
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.
Non-Probate Transfers
Along with living trusts, Kentucky law offers multiple other options for non-probate transfer of assets:
Spousal Rights
Elective Share
Kentucky law protects surviving spouses from disinheritance by guarantying a surviving spouse an elective share in a decedent spouse’s probate estate. When a surviving spouse opts for an elective share rather than the share provided under the decedent spouse’s 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
- The elective share is generally one-half of personal property and one-third of real estate, subject to a few qualifications
Spousal Exemption
Surviving spouses are also entitled to a spousal exemption of up to $30,000 (recently increased from $15,000) in personal property or cash.
Need help creating the right estate plan for your Kentucky family?
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Wills vs. Trusts: Comparison
| Feature | Wills | Trusts |
|---|---|---|
| When It Takes Effect | After death | Can be immediate (living trust) or after death (testamentary trust) |
| Probate Process | Requires probate | Assets in trust avoid probate |
| Privacy | Public record | Generally private |
| Challenges | Can be challenged in probate court | More difficult to challenge |
| Cost to Create | Generally less expensive | Usually more expensive |
| Ongoing Administration | None until death | May require ongoing management |
| Protection During Incapacity | None (requires separate power of attorney) | Can provide management if grantor becomes incapacitated |
| Inheritance Tax Impact | Assets subject to Kentucky inheritance tax | May offer planning opportunities for non-exempt heirs |
When It Takes Effect
Wills: After death
Trusts: Can be immediate (living trust) or after death (testamentary trust)
Probate Process
Wills: Requires probate
Trusts: Assets in trust avoid probate
Privacy
Wills: Public record
Trusts: Generally private
Challenges
Wills: Can be challenged in probate court
Trusts: More difficult to challenge
Cost to Create
Wills: Generally less expensive
Trusts: Usually more expensive
Ongoing Administration
Wills: None until death
Trusts: May require ongoing management
Protection During Incapacity
Wills: None (requires separate power of attorney)
Trusts: Can provide management if grantor becomes incapacitated
Inheritance Tax Impact
Wills: Assets subject to Kentucky inheritance tax
Trusts: May offer planning opportunities for non-exempt heirs
Conclusion
Creating a will or trust does not have to be difficult or intimidating. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests (to name a few)—can add a layer of complexity and result in unforeseen long-term consequences. Whenever any out-of-the-ordinary issues are present, it’s a good idea to consult with an experienced attorney familiar with and licensed under the laws of Kentucky.
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Frequently Asked Questions
Do I need a lawyer to create a will in Kentucky?
While Kentucky law doesn’t require an attorney to create a valid will, consulting with an estate planning lawyer is highly recommended, especially for complex situations. A properly executed will must meet specific requirements, and an attorney can help ensure your will is legally sound and reflects your wishes accurately. Kentucky has particular rules regarding interested witnesses and document execution that can be difficult to navigate without professional guidance.
What happens if I die without a will in Kentucky?
If you die without a will in Kentucky (intestate), state laws determine how your assets are distributed. Your spouse would receive one-half of your personal property, one-third of any real estate, and potentially a $30,000 spousal exemption. The remainder would be distributed to your children equally, or if you have no children, to your parents, siblings, or other relatives according to Kentucky’s intestacy hierarchy. Additionally, the probate court would appoint an administrator for your estate and guardians for minor children without considering your preferences.
Who pays Kentucky inheritance tax?
Kentucky is one of only six states that still impose an inheritance tax, but it has generous exemptions for close relatives. Beneficiaries are divided into three classes for tax purposes: Class A (spouse, parents, children, grandchildren, siblings) are completely exempt from inheritance tax. Class B (nieces, nephews, half-nieces, half-nephews, daughters-in-law, sons-in-law, aunts, uncles) pay 4% to 16% but receive a $1,000 exemption. Class C (all other beneficiaries) pay 6% to 16% with only a $500 exemption. The tax applies to all property with a Kentucky situs, except real estate located outside Kentucky. The beneficiary is responsible for paying the tax, not the estate.
Can I write a handwritten will in Kentucky?
Yes, Kentucky is one of the states that recognizes holographic (handwritten) wills. For a handwritten will to be valid in Kentucky, it must be dated, signed by you, and have all material provisions written in your own handwriting. Unlike traditional wills, holographic wills in Kentucky don’t require witnesses. This makes them easier to create but potentially more vulnerable to challenges. The court will need to verify your handwriting, typically through testimony from people familiar with it. While holographic wills are legally valid, they often lack important provisions and safeguards that an attorney would include in a formal will.
What is Kentucky’s spousal exemption?
Kentucky provides surviving spouses with a spousal exemption of up to $30,000 in personal property or cash (recently increased from $15,000). This is a priority claim that allows the spouse to receive these assets before other distributions are made from the estate, including payments to creditors. The exemption is in addition to any property the spouse receives through the will or intestate succession. If there’s not enough personal property to satisfy the exemption, the spouse can select other property from the estate to reach the $30,000 value. This provision helps ensure that surviving spouses have access to immediate funds and personal effects during the estate administration process.
What’s unique about Kentucky’s elective share?
Kentucky’s spousal elective share differs from many other states in that it’s based on what the spouse would have received under intestate succession rather than being a fixed percentage of the estate. When a spouse elects against the will, they typically receive one-half of the decedent’s personal property and one-third of the real estate. This differs from states that offer a flat percentage of the entire estate. Another distinctive feature is that Kentucky’s elective share only applies to probate assets—property passing outside probate through joint tenancy, trusts, or beneficiary designations is not included in the calculation. This creates important planning opportunities for those who wish to direct assets to other beneficiaries while still complying with spousal protection laws.
Does Kentucky recognize transfer-on-death deeds?
No, Kentucky does not currently recognize transfer-on-death (TOD) deeds for real estate. This means Kentucky property owners cannot use beneficiary designations to transfer real estate directly to heirs outside of probate—a tool that is available in many other states. Similarly, Kentucky does not allow TOD designations on vehicle titles. For Kentucky residents seeking to transfer property without probate, alternative options include creating a revocable living trust, holding property as joint tenants with right of survivorship, or for married couples, using tenancy by the entirety for real estate. Each approach has different legal implications and tax consequences that should be considered as part of a comprehensive estate plan.
How does tenancy by the entirety work in Kentucky?
Kentucky is one of the states that recognizes tenancy by the entirety, a special form of property ownership available only to married couples. Unlike joint tenancy with right of survivorship, which can be used by any co-owners, tenancy by the entirety has unique protections. In Kentucky, this ownership form is limited to real estate and provides automatic transfer to the surviving spouse upon death without going through probate. The most significant advantage is strong creditor protection—creditors of just one spouse generally cannot force the sale of property held as tenants by the entirety. This makes it an excellent asset protection tool for married couples in Kentucky, especially for their primary residence.
What happens to my digital assets in Kentucky?
Kentucky has adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a framework for managing digital assets after death. This law allows you to use online tools provided by digital service providers or specific language in your will, trust, or power of attorney to authorize someone to access and manage your digital accounts. Without such authorization, fiduciaries may have limited or no access to your online accounts, cryptocurrency, digital photos, or other virtual assets. This makes it increasingly important to include specific digital asset provisions in your estate planning documents and to keep a secure inventory of your online accounts and access information for your executor or trustee.
