Kentucky Living Trust

Introduction

Key Things to Know

1. 1

   Kentucky's biggest surprise for living trust readers is legal, not financial: a 2026 amendment to KRS 392.020(5) redefines the property pool used to calculate a surviving spouse's dower and curtesy share to include any property held in a trust over which the decedent held a power of revocation at death. Funding your home or investments into a Kentucky revocable living trust no longer removes them from your spouse's statutory claim, the opposite of what many readers assume a living trust accomplishes. A related two-year clawback in KRS 392.020(6) also pulls in most gifts made within two years of death.

2. 2

   A Kentucky living trust avoids probate only for assets you actually retitle into it; property left in your own name still goes through probate regardless of what the trust document says. Creating the trust itself is easy: KRS 386B.4-020(1) requires only that you have capacity, indicate an intent to create the trust, name a definite beneficiary, give the trustee duties to perform, and avoid being the sole trustee and sole beneficiary. No writing, witness, or notarization is required for the trust instrument itself.

3. 3

   Funding real property into a Kentucky trust has its own trap: KRS 382.110(2) bars a county clerk from recording a deed unless it plainly states the immediate source of the settlor's title, citing the book and page or instrument number of the settlor's own vesting deed. The deed must also be acknowledged before a notary or county clerk under KRS 382.130. A deed into the trust is exempt from Kentucky's real estate transfer tax when the settlor is the trust's sole beneficiary (KRS 142.050(7)(a)).

4. 4

   Kentucky's homestead exemption is small and fixed: KRS 427.060 shields only $5,000 of an individual's equity in a permanent residence from execution or judgment, a figure last amended in 1980 with no inflation adjustment found in the statute. No Kentucky statute or reported decision addresses whether this exemption survives once the residence is deeded into a revocable living trust; treat that as an open question and ask a Kentucky attorney before relying on it.

5. 5

   Kentucky is not a community property state, but spouses can opt into one through the Kentucky Community Property Trust Act, KRS 386.620 to 386.624, effective 2020. A joint trust must expressly declare itself a Kentucky community property trust, use a qualified trustee, be signed by both spouses, and open with a statutory warning about the marital and divorce consequences. This is elective, not automatic; an ordinary Kentucky joint trust is not a community property trust unless drafted to meet these requirements.

6. 6

   Kentucky has a trust registration statute, but registration is opt-in: KRS 386B.2-050 requires nothing to be filed with any court unless the settlor directs registration in the trust instrument itself, an unusual default even among the states that regulate registration at all. Separately, a trustee can hand a bank or title company a certification of trust under KRS 386B.10-120 instead of the full instrument, and disputes over that certification go to Kentucky's District Court, which has exclusive jurisdiction over them.

7. 7

   Kentucky abolished the rule against perpetuities outright: KRS 381.224 lets an interest created by this trust run indefinitely, putting Kentucky alongside a small group of true dynasty-trust states. Two cautions offset that flexibility: Kentucky's inheritance tax, KRS 140.020, expressly reaches property in a revocable trust over which the settlor kept a power of revocation, so a trust does not avoid it; and a Kentucky revocable trust gives the settlor no protection from the settlor's own creditors during life (KRS 386B.5-040(1)(a)), nor does an irrevocable self-settled trust shield assets from the settlor's own creditors (KRS 386B.5-040(1)(b)).

Kentucky Requirements for Living Trust

• Kentucky No Notary or Witness Required to Create the Trust

  KRS 386B.4-020(1) requires only settlor capacity, an indicated intent to create the trust, a definite beneficiary, trustee duties to perform, and that the settlor is not the sole trustee and sole beneficiary. Contrast a Kentucky will, which needs two credible witnesses under KRS 394.040.

• Kentucky Dower and Curtesy Now Reaches Revocable Trust Assets

  A 2026 amendment to KRS 392.020(5) defines the property pool for a surviving spouse's dower and curtesy share to include property held in a trust over which the decedent held a power of revocation at death, with a two-year clawback on other gifts under KRS 392.020(6).

• Kentucky Deed Recording Requires the Source-of-Title Chain

  KRS 382.110(2) bars a county clerk from recording a deed into the trust unless it states the immediate source of the settlor's title, citing the prior recorded deed's book and page or instrument number. The deed must also be acknowledged before a notary or clerk under KRS 382.130.

• Kentucky Trust Registration Is Opt-In Only

  KRS 386B.2-050 requires nothing to be filed with the District Court unless the settlor directs registration in the trust instrument itself. Most Kentucky living trusts are silent on registration and file nothing.

• Kentucky Certificate of Trust and District Court Jurisdiction

  KRS 386B.10-120 lets a trustee furnish a certification of trust instead of the full instrument, without disclosing dispositive terms. Disputes over a certification are subject to the exclusive jurisdiction of Kentucky's District Court under KRS 386B.10-120(10).

• Kentucky Community Property Trust Act Is Elective

  KRS 386.620 to 386.624 lets married Kentucky couples opt into community-property treatment through a specially drafted joint trust with a qualified trustee and a statutory warning notice. An ordinary Kentucky joint trust does not get this treatment unless drafted to meet these requirements.

• Kentucky Rule Against Perpetuities Fully Abolished

  KRS 381.224 abolishes the common-law rule against perpetuities entirely for Kentucky property, allowing a trust created under this instrument to run indefinitely rather than being capped at a term of years.