2013 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
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principal that 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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