{"data":{"id":"us-ky/krs-386.355","jurisdiction":"us-ky","citation":"KRS 386.355","heading":"Acts prohibited -- Policy of state regarding private foundations -- Split-","body":"interest trusts -- Charitable trusts.\n(1) In the administration of any trust which is a \"private foundation\" as defined in\nSection 509 of the Internal Revenue Code, a trust for charitable purposes described\nin Section 4947(a)(1) of the Internal Revenue Code to the extent that it is treated for\nfederal tax purposes as such a private foundation, or a \"split -interest trust\" as\ndescribed in Section 4947(a)(2) of the Internal Revenue Code, the following acts are\nprohibited:\n(a) Engaging in any act of \"self -dealing\" (as defined in Section 4941(d) of the\nInternal Revenue Code) which would give rise to any liability for any tax\nimposed by Section 4941 of the Internal Revenue Code;\n(b) Retaining any \"excess business holdings\" (as defined in Section 4943(c) of the\nInternal Revenue Code) which would give rise to any liability for any tax\nimposed by Section 4943 of the Internal Revenue Code;\n(c) Making any investments which would jeopardize th e carrying out of any of\nthe exempt purposes of the trust, within the meaning of Section 4944 of the\nInternal Revenue Code, so as to give rise to any liability for any tax imposed\nby Section 4944 of the Internal Revenue Code; and\n(d) Making any \"taxable ex penditures\" (as defined in Section 4945(d) of the\nInternal Revenue Code) which would give rise to any liability for any tax\nimposed by Section 4945 of the Internal Revenue Code; provided, however,\nthat the prohibitions of this subsection shall not apply to  split-interest trusts or\nto amounts thereof, to the extent that such prohibitions are made inapplicable\nthereto by Section 4947 of the Internal Revenue Code.\n(2) In the administration of any trust which is a \"private foundation\" as defined in\nSection 509 of the Internal Revenue Code, or a trust for charitable purposes\ndescribed in Section 4947(a)(1) of the Internal Revenue Code to the extent that it is\ntreated for federal tax purposes as such a private foundation, there shall, for the\npurposes specified in  the governing instrument, be distributed at such time and in\nsuch manner, for each taxable year, amounts of income and principal at least\nsufficient to avoid liability for any tax imposed by Section 4942 of the Internal\nRevenue Code.\n(3) Subsections (1) a nd (2) of this section express the continuing policy of this state\nwith respect to charitable trust interests and are enacted to assist such trusts in\nmaintaining various tax benefits extended to them, and shall apply to all trusts\ndescribed therein; provi ded, however, that subsections (1) and (2) of this section\nshall not apply to a trust in existence on July 1, 1972, to the extent that the Attorney\nGeneral of this state, the trustor, or any beneficiary of such trust, on or before\nNovember 30, 1972, files with the trustee of such trust a written objection to the\napplication to such trust of one (1) or more provisions of subsections (1) and (2) of\nthis section and the trustee receiving such written objection commences an action\non or before December 31, 1972 , in the court having jurisdiction over such trust to\nreform its governing instrument or any other instrument in order to meet, or to\nexcuse such trust from compliance with the requirements of subsections (1) and (2)\nof this section. If a trustee receiving such written objection shall commence such an\naction, the one (1) or more provisions of subsections (1) and (2) of this section\nspecified in such written objection shall not apply to such trust unless and until such\ncourt determines that their application  to such trust is in the best interests of all\nparties in interest.\n(4) No trustee of a trust to which subsection (1) or (2) of this section is applicable shall\nbe surcharged for a violation of a prohibition or requirement of said subsections\nunless he par ticipated in such violation knowing that it was a violation, nor shall\nsuch a trustee be surcharged if such violation was not willful and was due to\nreasonable cause; provided, however, that this subsection does not exonerate a\ntrustee from any responsibil ity or liability to which he is subject under any other\nrule of law, whether or not duplicated in subsections (1) and (2) of this section.\n(5) Except as provided in subsection (4) of this section, nothing in this section shall\nimpair the rights and powers of the courts or the Attorney General with respect to\nany trust.\n(6) In furtherance of the continuing policy of this state to assist charitable trust interests\nin maintaining various tax benefits extended to them, the provisions of subsections\n(1) and (2) of this section shall be deemed to have been in force and effect on\nJanuary 1, 1970; provided, however, the provisions of said subsections shall affect a\ntrust organized before January 1, 1970, only on and after the first day of its first\ntaxable year (for federal tax purposes) beginning on or after January 1, 1972.","path":["KRS Chapter 386"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=35884","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:16Z","sha256":"f613f0a5eae1482158f3d01631a1578625f86806965e49b9cdb1636f70c25896","source_id":"us-ky","stale":false,"prev":"us-ky/krs-386.350","next":"us-ky/krs-386.360"},"notice":"GroundRules: Original legal text. Not legal advice."}