{"data":{"id":"us-ky/krs-386b.5-020","jurisdiction":"us-ky","citation":"KRS 386B.5-020","heading":"Spendthrift trusts.","body":"(1) As used in this section, unless the context otherwise requires, \"spendthrift trust\"\nmeans a trust in which by the terms of the instrument creating it a valid restraint on\nthe voluntary and involuntary alienation of the interest of a beneficiary is imposed.\n(2) Estates of every kind held or possessed in trust shall be subject to the debts and\ncharges of the beneficiaries thereof the same as if the beneficiaries also owned the\nsimilar legal interest in the property, unless the trust is a spendthrift trust.\n(3) Specific language shall not be necessary to create a spendthrift trust, and it shall be\nsufficient if the instrument creating the trust manifests an intention to create a\nspendthrift trust.\n(4) If an instrument creating a trust provides that a beneficiar y is entitled to receive\nincome of the trust and that his interest shall not be alienable by him and shall not\nbe subject to alienation by operation of law or legal process, the restraint on the\nvoluntary and involuntary alienation of his right to income d ue and to accrue shall\nbe valid.\n(5) If an instrument creating a trust provides that a beneficiary is entitled to receive\nprincipal of the trust at a future time and that his interest shall not be alienable by\nhim and shall not be subject to alienation by operation of law or legal process, the\nrestraint on the voluntary and involuntary alienation of his right to principal shall be\nvalid.\n(6) Although a trust is a spendthrift trust, the interest of the beneficiary shall be subject\nto the satisfaction of an enforceable claim against the beneficiary:\n(a) By the spouse or child of the beneficiary for support, or by the spouse for\nmaintenance;\n(b) If the trust is not a trust described in subsection (7)(b) of this section, by\nproviders of necessary services render ed to the beneficiary or necessary\nsupplies furnished to him; and\n(c) By the United States or this Commonwealth for taxes due from him or her on\naccount of his or her interest in the trust or the income therefrom.\n(7) (a) If a person creates for his or her  own benefit a trust with a provision\nrestraining the voluntary or involuntary alienation of his or her interest, his or\nher interest nevertheless shall be subject to alienation by operation of law or\nlegal process.\n(b) This subsection shall not be constru ed to subject to alienation any interest in\nan individual retirement account or annuity, tax -sheltered annuity, simplified\nemployee pension, pension, profit -sharing, stock bonus, or other retirement\nplan described in the Internal Revenue Code of 1986, as a mended, which\nqualifies for the deferral of current income tax until the date benefits are\ndistributed.\n(c) For purposes of this subsection, a person has not created a trust for such\nperson's own benefit solely because a trustee who is not such person is\nauthorized under the trust instrument to pay or reimburse such person for, or\npay directly to the taxing authorities, any tax on trust income or principal that\nis payable by such person under the law imposing the tax.\n(8) (a) For the purposes of this section, amounts and property contributed to the\nfollowing trusts are not deemed to have been contributed by the settlor of the\ntrust, and a person who would otherwise be treated as a settlor or a deemed\nsettlor of the following trusts shall not be treated as a settlor:\n1. An irrevocable inter vivos marital trust that is treated as qualified\nterminable interest property under 26 U.S.C. sec. 2523(f), as amended, if\nthe settlor is a beneficiary of the trust after the death of the sett lor's\nspouse;\n2. An irrevocable inter vivos marital trust that is treated as a general power\nof appointment trust under 26 U.S.C. sec. 2523(e), as amended, if the\nsettlor is a beneficiary of the trust after the death of the settlor's spouse;\n3. An irrevocable inter vivos trust for the spouse of the settlor that does not\nqualify for the gift tax marital deduction if the settlor is a beneficiary of\nthe trust only after the death of the settlor's spouse;\n4. A special needs trust as defined in KRS 387.860, inc luding a trust\nestablished pursuant to judicial action under KRS 387.855;\n5. A trust created under 42 U.S.C. sec. 1396p(d)(4)(A) or (C); and\n6. A trust created under 42 U.S.C. sec. 1396p(c)(2)(B).\n(b) For the purposes of this subsection, a person is a bene ficiary whether so\nnamed under the initial trust instrument or through the exercise by that\nperson's spouse or by another person of a limited or general power of\nappointment.\n(c) For the purposes of this section, the settlor shall be any person who:\n1. Created the trust;\n2. Contributed property to the trust; or\n3  Is deemed to have contributed property to the trust.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=43104","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:19Z","sha256":"a775273eb414909e64619b539f5ba1ee5eb2076946328a05ea76116c03f0213f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-386b.5-010","next":"us-ky/krs-386b.5-030"},"notice":"GroundRules: Original legal text. Not legal advice."}