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386A.6-060 Charging order.
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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 a judgment out of the judgment debtors
beneficial interest.
On application to a court of competent jurisdiction by a judgment creditor of a
beneficial owner or a beneficial owners transferee, a court may charge the
judgment debtors beneficial interest with payment of the unsatisfied amount of
the judgment. To the extent so charged, the judgment creditor shall have no
right to participate in the management or to cause the dissolution of the
statutory trust. The court may appoint a receiver of the share of the
distributions due or to become due to the judgment debtor in respect of the
beneficial interest and make all other orders, directions, accounts, and inquiries
the judgment creditor might have made or which the circumstances of the case
may require to give effect to the charging order.
A charging order constitutes a lien on and the right to receive distributions
made with respect to the judgment debtors beneficial interest. A charging
order does not of itself constitute an assignment of the beneficial interest.
The court may order a foreclosure upon the beneficial interest subject to the
charging order at any time. The purchaser of the beneficial interest at the
foreclosure sale shall have no right to participate in the management or to
cause the dissolution of the statutory trust. Upon foreclosure the beneficial
owner shall be dissociated from and cease to be a beneficial owner of the trust.
At any time before foreclosure, the charged beneficial interest may be
redeemed:
(a) By the judgment debtor;
(b) With property other than statutory trust property, by one (1) or more of the
other beneficial owners; and
(c) With statutory trust property, by the statutory trust with the consent of the
trustees.
This section does not deprive a beneficial owner or a beneficial owners
transferee of the benefit of any exemption laws applicable to the beneficial
interest.
The statutory trust is not a necessary party to an application for a charging
order. Service of the charging order on a statutory trust may be made by the
court granting the charging order or as the court should otherwise direct.
Effective:July 12, 2012
History: Created 2012 Ky. Acts ch. 81, sec. 50, effective July 12, 2012.
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