KRS 386.605: Restrictions on actions, remedies, and claims. (Effective July 15, 2026)

(1) Notwithstanding any law to the contrary, including KRS 386B.5 -020(7)(a), no

action of any kind, including but not limited to an action to enforce a judgment

entered by a court or other body having adjudicative authority, shall be brought at

law or in equity for an attachment or other provisional remedy against property that

is the subject of a qualified disposition to a qualified trust or for the avoidance of a

qualified disposition to a qualified trust, unless:

(a) The action is brought pursuant to the Kentucky Uniform Voidable

Transactions Act, KRS 378A.005 to 378A.140; and

(b) The qualified disposition was made with actual intent to defraud a creditor

whose claim arose after a qualified disposition.

(2) (a) Notwithstanding KRS 378A.090, a creditor's claim under subsection (1) of

this section shall be extinguished:

1. If the person is a creditor when the qualified disposition to a qualified

trust is made, unless the acti on is commenced within the later of two (2)

years after the qualified disposition is made or six (6) months after the

person discovers or reasonably should have discovered the qualified

disposition; or

2. If the person becomes a creditor after a qualified disposition to a

qualified trust is made, unless the action is commenced within two (2)

years after the qualified disposition is made.

(b) Any valid lien attaching to property before a disposition of that property to a

trustee of a qualified trust shall su rvive the disposition, and the trustee shall

take title to the property subject to the valid lien and subject to any

agreements that created or perfected the valid lien. This chapter shall not be

construed to authorize any disposition that is prohibited by the terms of any

agreements, notes, guaranties, mortgages, indentures, instruments,

undertakings, or other documents. In the event of any conflict between this

paragraph and any other provision of this chapter, this paragraph shall control.

(c) If paragraph (a) of this subsection applies:

1. A person shall be deemed to have discovered the existence of a qualified

disposition to a qualified trust at the time any public record is made of

any transfer of property relative to the qualified dispositio n, including

but not limited to the conveyance of real property that is recorded in the

office of the county clerk in which the property is located, the filing of a

financing statement under Article 9 of KRS Chapter 355, or the

equivalent recording or fili ng of either with the appropriate person or

official under the laws of a jurisdiction other than this Commonwealth;

and

2. No creditor shall bring an action with respect to property that is the

subject of a qualified disposition unless that creditor proves by clear and

convincing evidence that the settlor's transfer of the property was made

with intent to defraud that specific creditor.

(3) For purposes of KRS 386.601 to 386.619, a qualified disposition that is made by

means of a disposition by a transferor who is a trustee shall be deemed to have been

made as of the time the property that is the subject of the qualified disposition was

originally transferred to the transferor acting in the capacity of trustee, or any

predecessor trustee, in a form that meet s the requirements of KRS 386.601(11)(a)

and (c).

(4) Notwithstanding any law to the contrary:

(a) A creditor, including a creditor whose claim arose before or after a qualified

disposition, or any other person shall have only the rights with respect to a

qualified disposition that are provided in this section and KRS 386.609;

(b) Neither a creditor nor any other person shall have any claim or cause of action

against the trustee, an advisor of a qualified trust, or any person involved in

the counseling, dra fting, preparation, execution, or funding of a qualified

trust; and

(c) For purposes of this subsection, counseling, drafting, preparation, execution,

or funding of a qualified trust includes the counseling, drafting, preparation,

execution, or funding of a limited partnership or limited liability company if

interests in the limited partnership or limited liability company are

subsequently transferred to the qualified trust.

(5) Notwithstanding any law to the contrary, no action of any kind, including but n ot

limited to an action to enforce a judgment entered by a court or other body having

adjudicative authority, shall be brought at law or in equity against a trustee or an

advisor of a qualified trust, or against any person involved in the counseling,

drafting, preparation, execution, or funding of a qualified trust if, as of the date the

action is brought, an action by a creditor with respect to the qualified trust would be

barred under this section.

(6) In circumstances where more than one (1) qualified di sposition is made by means

of the same qualified trust:

(a) The making of a subsequent qualified disposition shall be disregarded in

determining whether a creditor's claim with respect to a prior qualified

disposition is extinguished as provided in subsection (2) of this section; and

(b) Any distribution to a beneficiary shall be deemed to have been made from the

latest qualified disposition.

(7) (a) If, in any action brought against a qualified trust, a court takes any action

whereby the court declines to apply the law of this Commonwealth in

determining the effect of a spendthrift provision of the trust:

1. The trustee shall immediately, upon the court's action and without the

further order of any court, cease in all respects to be trustee and a

successor trustee shall succeed as trustee in accordance with the terms of

the trust; or

2. If the trust does not provide for a successor trustee and the trust would

otherwise be without a trustee, a court of this Commonwealth, upon the

application of any beneficia ry of the trust, shall appoint a successor

trustee upon the terms and conditions it determines to be consistent with

the purposes of the trust and KRS 386.601 to 386.619.

(b) Upon the trustee's ceasing to be trustee, the trustee shall have no power or

authority other than to convey the trust property to the successor trustee

named in the trust in accordance with this subsection.

(8) A qualified trust shall be subject to this section whether or not the transferor retains

any or all of the powers and rights d escribed in KRS 386.617 or serves as an

investment advisor pursuant to KRS 386.613.

(9) (a) Notwithstanding subsection (1) or (2) of this section, the limitations on

actions by creditors in law or equity shall not apply, and such creditors' claims

shall no t be extinguished, if the transferor is indebted on account of an

agreement, judgment, or order of a court for the payment of any of the

following:

1. Past due child support;

2. Past due temporary or permanent maintenance to a spouse or former

spouse;

3. A written agreement, judgment, or order of a court for division of

marital property of a spouse or former spouse, but only to the extent of

the debt, legally mandated interest on the debt, and the reasonable cost

of collection of the debt; or

4. A valid note, mortgage, security interest, or debt instrument in existence

prior to the qualified disposition.

(b) 1. A claim under this subsection shall be asserted against a trustee only:

a. Upon a final, nonappealable determination of a Kentucky court or

a fully d omesticated, final, nonappealable order of a court of

another state as defined by KRS 386B.1 -010 that the debt is past

due; and

b. After the court has determined that the claimant has made

reasonable attempts to collect the debt from any other sources of

the transferor or that such attempts would be futile.

2. Nothing in this paragraph shall be construed to prohibit the court from

making the findings required in subparagraph 1. of this paragraph in the

same proceeding and order.

(c) This subsection shall not apply to any claim for forced heirship, legitime, or

elective share.