{"data":{"id":"us-ky/krs-386.609","jurisdiction":"us-ky","citation":"KRS 386.609","heading":"Avoidance of qualified dispositions.","body":"(1) A qualified disposition to a qualified trust shall be avoided only to the extent\nnecessary to satisfy the transferor's debt to the creditor at whose instance the\ndisposition was avoided, together with costs, including attorneys' fees, that the court\nmay allow.\n(2) In the event any qualified disposition is avoided as described in subsection (1) of\nthis section:\n(a) If the court is satisfied that a qualified trustee has not acted in bad faith in\naccepting or administering the property that is the subject of t he qualified\ndisposition:\n1. The qualified trustee shall have a first and paramount lien against the\nproperty that is the subject of the qualified disposition in an amount\nequal to the entire cost, including attorneys' fees, properly incurred by\nthe qualified trustee in defense of the action or proceedings to avoid the\nqualified disposition except any valid lien attaching to the property\nbefore a disposition of that property to a trustee of a qualified trust shall\nsurvive the disposition, and the trustee sh all take title to the property\nsubject to the valid lien and subject to any agreements that created or\nperfected the valid lien;\n2. The qualified disposition shall be avoided subject to the proper fees,\ncosts, preexisting rights, claims, and interests of the qualified trustee and\nof any predecessor qualified trustee that has not acted in bad faith; and\n3. For purposes of this paragraph, it shall be presumed that the qualified\ntrustee did not act in bad faith merely by accepting the property; and\n(b) 1. If t he court is satisfied that a beneficiary of a qualified trust has not\nacted in bad faith, the avoidance of the qualified disposition shall be\nsubject to the beneficiary's right to retain any distribution made upon the\nexercise of a trust power or discretio n vested in the qualified trustee or\nqualified trustees of the qualified trust, which power or discretion was\nproperly exercised prior to the creditor's commencement of an action to\navoid a qualified disposition.\n2. For purposes of this paragraph, it shall be presumed that the beneficiary,\nincluding a beneficiary who is also a transferor of the trust, did not act in\nbad faith merely by creating the trust or by accepting a distribution made\nin accordance with the terms of the trust.\n(3) A disposition by a trustee that is not a qualified trustee to a trustee that is a qualified\ntrustee shall not be treated as other than a qualified disposition solely because the\ntrust instrument fails to meet the requirements of KRS 386.601(11)(a).\n(4) In the case of a disposition to more than one (1) trustee, a disposition that is\notherwise a qualified disposition shall not be treated as other than a qualified\ndisposition solely because not all of the recipient trustees are qualified trustees.","path":["KRS Chapter 386"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57726","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:17Z","sha256":"c6feeead23644a8adf2f6b832551432997b745cf3c525091ac5bc7ccaf36b4d6","source_id":"us-ky","stale":false,"prev":"us-ky/krs-386.607","next":"us-ky/krs-386.610"},"notice":"GroundRules: Original legal text. Not legal advice."}