2012 Kentucky Revised Statutes CHAPTER 381 TITLE TO PROPERTY AND RESTRICTIONS ON USE, OWNERSHIP, AND ALIENATION 381.180 Estates in trust subject to debts of beneficiary -- Spendthrift trusts excepted -- Other exceptions.
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381.180 Estates in trust subject to debts of beneficiary -- Spendthrift trusts
excepted -- Other exceptions.
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Estates of every kind held or possessed in trust shall be subject to the debts and
charges of the beneficiaries thereof the same as if the beneficiaries also owned the
similar legal interest in the property, unless the trust is a spendthrift trust.
As used herein, unless the context otherwise requires, "spendthrift trust" means a
trust in which by the terms of the instrument creating it a valid restraint on the
voluntary and involuntary alienation of the interest of a beneficiary is imposed.
Specific language shall not be necessary to create a spendthrift trust and it shall be
sufficient if the instrument creating the trust manifests an intention to create a
spendthrift trust.
If an instrument creating a trust provides that a beneficiary is entitled to receive
income of the trust and that his interest shall not be alienable by him and shall not
be subject to alienation by operation of law or legal process, the restraint on the
voluntary and involuntary alienation of his right to income due and to accrue shall
be valid.
If an instrument creating a trust provides that a beneficiary is entitled to receive
principal of the trust at a future time and that his interest shall not be alienable by
him and shall not be subject to alienation by operation of law or legal process, the
restraint on the voluntary and involuntary alienation of his right to principal shall be
valid.
Although a trust is a spendthrift trust, the interest of the beneficiary shall be subject
to the satisfaction of an enforceable claim against the beneficiary:
(a) By the spouse or child of the beneficiary for support, or by the spouse for
maintenance;
(b) If the trust is not a trust described in subsection (7)(b) of this section by
providers of necessary services rendered to the beneficiary or necessary
supplies furnished to him; and
(c) By the United States or the Commonwealth of Kentucky for taxes due from
him on account of his interest in the trust or the income therefrom.
(a) If a person creates for his own benefit a trust with a provision restraining the
voluntary or involuntary alienation of his interest, his interest nevertheless
shall be subject to alienation by operation of law or legal process.
(b) This subsection shall not be construed to subject to alienation any interest in
an individual retirement account or annuity, tax sheltered annuity, simplified
employee pension, pension, profit-sharing, stock bonus, or other retirement
plan described in the Internal Revenue Code of 1986, as amended, which
qualifies for the deferral of current income tax until the date benefits are
distributed.
(c) For purposes of this subsection, a person has not created a trust for such
person's own benefit solely because a trustee who is not such person is
authorized under the trust instrument to pay or reimburse such person for, or
pay directly to the taxing authorities, any tax on trust income or principal that
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is payable by such person under the law imposing the tax.
For the purposes of this section, amounts and property contributed to the
following trusts are not deemed to have been contributed by the settlor of the
trust, and a person who would otherwise be treated as a settlor or a deemed
settlor of the following trusts shall not be treated as a settlor:
1.
An irrevocable inter vivos marital trust that is treated as qualified
terminable interest property under Section 2523(f) of the Internal
Revenue Code of 1986, as amended, if the settlor is a beneficiary of the
trust after the death of the settlor's spouse;
2.
An irrevocable inter vivos marital trust that is treated as a general power
of appointment trust under Section 2523(e) of the Internal Revenue
Code if the settlor is a beneficiary of the trust after the death of the
settlor's spouse;
3.
An irrevocable inter vivos trust for the spouse of the settlor that does not
qualify for the gift tax marital deduction if the settlor is a beneficiary of
the trust only after the death of the settlor's spouse.
For the purposes of this subsection, a person is a beneficiary whether so
named under the initial trust instrument or through the exercise by that
person's spouse or by another person of a limited or general power of
appointment.
For purposes of this section, the settlor shall be any person who:
1.
Created the trust;
2.
Contributed property to the trust; or
3.
Is deemed to have contributed property to the trust.
Effective: July 12, 2012
History: Amended 2012 Ky. Acts ch. 59, sec. 7, effective July 12, 2012. -- Amended
1990 Ky. Acts ch. 220, sec. 1, effective July 13, 1990. -- Amended 1974 Ky. Acts
ch. 386, sec. 69. -- Amended 1966 Ky. Acts ch. 61, sec. 1. -- Recodified 1942 Ky.
Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. sec. 2355.
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