Kentucky Statutes 386B.4-110 – Modification or termination of noncharitable irrevocable trust by consent
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(1) Except as otherwise provided in the terms of the trust, a noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, without court approval, even if the modification or termination is inconsistent with a material purpose of the trust. A settlor’s power to consent to a trust’s modification or termination may be exercised:
(a) By an agent under a power of attorney only to the extent expressly authorized by the power of attorney and not prohibited by the terms of the trust;
(b) By the settlor’s conservator with the approval of the court supervising the conservatorship if an agent is not so authorized and the conservator is not prohibited by the terms of the trust; or
(c) By the settlor’s guardian with the approval of the court supervising the guardianship if an agent is not so authorized and a conservator has not been appointed and the guardian is not prohibited by the terms of the trust.
(2) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.
(3) A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.
(4) Upon termination of a trust under subsection (1) or (2) of this section, the trustee shall distribute the trust property as agreed by the beneficiaries.
(5) If not all of the beneficiaries consent to a proposed modification or termination of the trust under subsection (1) or (2) of this section, the modification or termination may be approved by the court if the court is satisfied that:
(a) If all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and
(b) The interests of a beneficiary who does not consent will be adequately protected.
(6) Subsection (1) of this section shall not apply to the following types of trusts:
(a) First-party special needs or supplemental trusts created under KRS § 387.855 to
387.910;
(b) Trusts created under 42 U.S.C. § 1396p(d)(4)(A); (c) Trusts created under 42 U.S.C. § 1396p(d)(4)(C);
(d) Trusts created under 42 U.S.C. § 1396p(c)(2)(B); and
(e) Third-party special needs or supplemental trusts established by a will, trust, or similar document and created under the common law or any other law of the Commonwealth.
(7) The District Court shall have exclusive jurisdiction over matters under subsection
(2) of this section.
Effective: July 15, 2014
History: Created 2014 Ky. Acts ch. 25, sec. 33, effective July 15, 2014.
(a) By an agent under a power of attorney only to the extent expressly authorized by the power of attorney and not prohibited by the terms of the trust;
Terms Used In Kentucky Statutes 386B.4-110
- Attorney: means attorney-at-law. See Kentucky Statutes 446.010
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Conservator: means a person appointed by the court to administer the estate of a minor or adult individual. See Kentucky Statutes 386B.1-010
- Continuance: Putting off of a hearing ot trial until a later time.
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Guardian: means a person appointed by the court, a parent, or a spouse to make decisions regarding the support, care, education, health, and welfare of a minor or adult individual. See Kentucky Statutes 386B.1-010
- Irrevocable trust: A trust arrangement that cannot be revoked, rescinded, or repealed by the grantor.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Power of attorney: A written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Source: OCC
- Property: means anything that may be the subject of ownership, whether legal or equitable, or any interest therein. See Kentucky Statutes 386B.1-010
- Settlor: means a person, including a testator, who creates or contributes property to a trust. See Kentucky Statutes 386B.1-010
- Spendthrift provision: means a term of a trust which restrains both voluntary and involuntary transfer of a beneficiary's interest. See Kentucky Statutes 386B.1-010
- Trust: means an express trust established by a trust instrument, including a will, whereby a trustee has the duty to administer a trust asset for the benefit of a named or otherwise described income or principal beneficiary, or both. See Kentucky Statutes 386B.1-010
(b) By the settlor’s conservator with the approval of the court supervising the conservatorship if an agent is not so authorized and the conservator is not prohibited by the terms of the trust; or
(c) By the settlor’s guardian with the approval of the court supervising the guardianship if an agent is not so authorized and a conservator has not been appointed and the guardian is not prohibited by the terms of the trust.
(2) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.
(3) A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.
(4) Upon termination of a trust under subsection (1) or (2) of this section, the trustee shall distribute the trust property as agreed by the beneficiaries.
(5) If not all of the beneficiaries consent to a proposed modification or termination of the trust under subsection (1) or (2) of this section, the modification or termination may be approved by the court if the court is satisfied that:
(a) If all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and
(b) The interests of a beneficiary who does not consent will be adequately protected.
(6) Subsection (1) of this section shall not apply to the following types of trusts:
(a) First-party special needs or supplemental trusts created under KRS § 387.855 to
387.910;
(b) Trusts created under 42 U.S.C. § 1396p(d)(4)(A); (c) Trusts created under 42 U.S.C. § 1396p(d)(4)(C);
(d) Trusts created under 42 U.S.C. § 1396p(c)(2)(B); and
(e) Third-party special needs or supplemental trusts established by a will, trust, or similar document and created under the common law or any other law of the Commonwealth.
(7) The District Court shall have exclusive jurisdiction over matters under subsection
(2) of this section.
Effective: July 15, 2014
History: Created 2014 Ky. Acts ch. 25, sec. 33, effective July 15, 2014.