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Kentucky Trust Administration
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Kentucky Trust Administration

How a Kentucky successor trustee settles a revocable trust after death: 60-day beneficiary notice, accounting, paying debts, and distribution under KRS 386B.

By Settled Editorial

If you are the successor trustee of a Kentucky revocable living trust, this guide explains what to do after the person who created the trust (the settlor) dies. You accept the role, take control of the trust property, notify the qualified beneficiaries within 60 days, pay valid debts and taxes, account for the money, and hand out what is left under the trust terms. Most of this work happens outside court, which is one reason families set up a living trust. For how the trust was set up during planning, see the Kentucky revocable living trust guide.

Kentucky trusts run under the Kentucky Uniform Trust Code at KRS Chapter 386B. Kentucky adopted the Uniform Trust Code in 2014, effective July 15, 2014, so its notice and accounting rules follow the model most states share, under Kentucky's own section numbers. This guide walks through the process in plain terms and points to the exact statute sections so you can read the law yourself. This is general information, not legal advice.

The Successor Trustee's Job at a Glance

Here is the sequence a Kentucky trust administration usually follows:

  1. Accept the trusteeship and read the full trust document plus any amendments.
  2. Order certified death certificates and secure the trust property.
  3. Get a tax ID number for the trust and open a trust bank account.
  4. Notify the qualified beneficiaries within 60 days, the deadline KRS 386B.8-130 sets.
  5. Take control of, value, and preserve the trust assets.
  6. Pay valid debts, final bills, and taxes, including any Kentucky inheritance tax.
  7. Send a written report to the qualified beneficiaries who ask for one.
  8. Distribute the remaining assets under the trust terms and close the trust.

Each step below explains what the law expects and where Kentucky probate may still come into play.

Step 1: Accept the Role and Read the Trust

While the settlor was alive and able to revoke the trust, it stayed changeable, and the beneficiaries' interests were subject to the settlor. Under KRS 386B.6-020, a trust is revocable unless its own terms expressly say it is irrevocable, so the settlor could amend or undo it at will. When the settlor dies, the revocable trust becomes irrevocable, and you move from a named backup to the acting trustee whose duties now run to the beneficiaries.

You accept the trusteeship by complying with any method the trust names, or by taking delivery of the trust property or acting as trustee (KRS 386B.7-010). Once you accept, KRS 386B.8-010 tells you to administer the trust in good faith, in line with its terms and purposes and the interests of the beneficiaries. Before you act, read the entire trust document with care. Confirm who the beneficiaries are, what each one receives, any conditions on a distribution, whether the trust pays you for your work, and who serves after you. A designated trustee who does not want the job can still act to preserve the property, as long as a rejection goes to a qualified beneficiary within a reasonable time (KRS 386B.7-010).

Step 2: Secure the Property and Get Organized

Act early to protect what the trust holds:

  • Order at least 10 to 15 certified death certificates. Banks, title companies, and transfer agents each want their own copy.
  • Secure the home, vehicles, valuables, and paperwork. Change the locks if the settlor lived alone.
  • Keep insurance on real estate and vehicles in force so a lapse does not expose the trust to loss.
  • Redirect the mail so you can find bills, account statements, and tax notices.

Get a Trust Tax ID and Bank Account

While the settlor was alive, a revocable trust usually used the settlor's Social Security number. After death, the trust needs its own Employer Identification Number (EIN). Apply free through the IRS. Then open a checking account in the trust's name using that EIN, and run every trust payment through it. KRS 386B.8-100 tells you to keep trust property separate from your own and to keep adequate records, so a dedicated account is not optional housekeeping. It is how you meet the statute.

Step 3: Notify the Qualified Beneficiaries

Kentucky, unlike a handful of states that wrote their own trust code, uses the Uniform Trust Code's fixed notice clock. KRS 386B.8-130 puts two 60-day deadlines on you once you take the role, and neither one waits for a beneficiary to ask.

  • Within 60 days after accepting the trusteeship, notify the qualified beneficiaries of your acceptance and of your name, address, and telephone number.
  • Within 60 days after you learn the trust has become irrevocable, which happens at the settlor's death, notify the qualified beneficiaries of the trust's existence, the identity of the settlor, their right to request a copy of the trust instrument, and their right to a trustee's report.
  • Give the beneficiaries advance notice of any change in the method or rate of your compensation.

Beyond those notices, KRS 386B.8-130(1)(a) gives you an ongoing duty to keep the qualified beneficiaries reasonably informed about the administration and the facts they need to protect their interests, and to respond promptly to a reasonable request for information. A qualified beneficiary is, in plain terms, a person entitled to income or principal now and a person who would take if the trust ended today.

One floor you cannot draft around: no matter what the trust says, KRS 386B.8-130(2) requires you to notify and report to at least one qualified beneficiary who is 25 years old or older, or a designated person who has a fiduciary relationship to a beneficiary. Send everything in writing and keep a dated copy. A written record avoids later arguments about what you shared and when. Matters under this notice section go to the District Court (KRS 386B.8-130(4)).

Step 4: Take Control of and Value the Trust Assets

KRS 386B.8-090 tells you to take reasonable steps to control and protect the trust property, and KRS 386B.8-120 tells you to collect what the trust is owed. Build a full inventory of what the trust holds:

  • Real estate, with a date-of-death appraisal for each parcel
  • Bank accounts and certificates of deposit
  • Investment and brokerage accounts
  • Retirement accounts or life insurance that name the trust as beneficiary
  • Business interests
  • Vehicles, jewelry, collectibles, and other personal property

Value each asset as of the date of death. Get professional appraisals for real estate, business interests, and high-value items. Accurate date-of-death values matter for taxes and for splitting assets fairly among beneficiaries.

Watch for Assets the Trust Does Not Own

A trust only controls what was retitled into it. Kentucky offers no transfer-on-death deed for real estate, so a funded trust is often the only thing keeping a Kentucky home out of court. If the settlor signed a Kentucky will but never moved an account or a deed into the trust, that asset may still need probate in Kentucky through the District Court. Many people pair a trust with a pour-over will that sends leftover property into the trust, but those assets usually pass through probate first. For modest out-of-trust personal property, Kentucky allows a small-estate path that dispenses with formal administration under KRS 395.455; confirm the current dollar limit with the District Court. If there is no valid will for the out-of-trust property, the Kentucky intestate succession rules decide who inherits it.

Step 5: Manage the Assets Prudently

While you hold the assets, you owe a duty of care. KRS 386B.8-040 tells you to administer the trust as a prudent person would, weighing the trust's purposes, terms, and distribution requirements, and to use reasonable care, skill, and caution. When you invest, KRS 386B.9-010 requires you to act as a prudent investor, judging each decision in the context of the whole portfolio rather than in isolation.

You also owe a duty of loyalty. KRS 386B.8-020 says you must administer the trust solely in the interests of the beneficiaries, and it makes a self-dealing transaction voidable: no loaning trust funds to yourself, no buying trust property for your own account, and no selling your own property to the trust, unless the trust or a court allows it. Stay away from any deal that mixes your personal interest with the trust's. You do not need to be a financial expert. You do need to act sensibly, keep records under KRS 386B.8-100, and get professional help for anything complicated.

Step 6: Pay Debts, Final Bills, and Taxes

Before any beneficiary receives a distribution, settle what the trust owes:

  • Final medical bills, utilities, and other valid debts
  • The settlor's final personal income tax return (Form 1040) for the year of death
  • A federal fiduciary income tax return (Form 1041), plus the matching Kentucky fiduciary income tax return (Form 741), if the trust earns enough income after death
  • Any federal estate tax, which reaches only very large estates

Kentucky is not a no-death-tax state. It levies an inheritance tax measured by each beneficiary's relationship to the settlor (KRS 140.070 and KRS 140.080). Class A takers, meaning a spouse, parent, child, grandchild, sibling, and, for deaths on or after January 1, 2026, a niece or nephew, pay nothing. Class B takers such as aunts, uncles, in-laws, and great-grandchildren are taxed above a $1,000 exemption, and Class C takers such as cousins, friends, and non-exempt organizations above a $500 exemption. If the trust pays out to anyone outside Class A, evaluate the inheritance tax before you distribute. Kentucky's separate estate tax (KRS 140.130) is a dormant pick-up tax that has produced nothing since 2004, so a modern estate owes no Kentucky estate tax. The Kentucky inheritance and estate tax guide has the class-by-class detail.

Do not rush distributions. If you pay out the trust and then find an unpaid debt or tax, you can be left personally responsible for the shortfall. Hold a reasonable reserve until you are confident the debts and taxes are covered. A CPA who handles trust returns earns the fee on anything but the simplest estate.

Step 7: Account to the Beneficiaries

The reporting duty sits in the same section as the notice deadlines. Under KRS 386B.8-130(1)(c), on a qualified beneficiary's request you must furnish a copy of the trust instrument, and you must send a report at least once a year and again when the trust ends. The report has to show the trust property, liabilities, receipts, and disbursements, the source and amount of your compensation, and a listing of the trust assets with their market values where feasible. This running record is what shows you handled the money honestly. A qualified beneficiary can waive the report in writing and can later withdraw that waiver for future reports.

If you breach a duty you owe a beneficiary, the consequences are laid out too. KRS 386B.10-010 lets a court compel you to account, redress the breach by paying money or restoring property, reduce or deny your compensation, remove you, or order other relief, and KRS 386B.10-020 measures the damages. A court can also award attorney's fees and costs as justice requires under KRS 386B.10-040.

Habits that keep you out of trouble:

  • Send a written report on a regular schedule, not only at the end.
  • Keep every receipt, statement, and appraisal in an organized file.
  • Answer reasonable written requests promptly.
  • Get a signed receipt from each beneficiary when you hand over a distribution.

What You Can Be Paid

Under KRS 386B.7-080, if the trust does not set your fee, you are entitled to compensation that is reasonable under the circumstances. If the trust does set your fee, you are paid as stated, though a court may allow more or less when your duties turn out very different from what the trust anticipated, or the stated amount is unreasonably high or low. You may also be reimbursed for expenses you properly incur (KRS 386B.7-090). Many family trustees waive a fee to leave more for the beneficiaries. If you do take one, disclose it in your report.

Step 8: Hand Out the Assets and Close the Trust

Once debts and taxes are handled, distribute what remains under the trust terms. KRS 386B.8-170 lets you send the beneficiaries a written proposal for distribution; a beneficiary who wants to object has 30 days after the proposal is sent, but only when the proposal spells out the right to object and the time to do it. Then move without delay to distribute the property to the people entitled to it, keeping a reasonable reserve for debts, expenses, and taxes. Follow this order:

  • Make specific gifts first, the items or dollar amounts left to named people.
  • Distribute the residue, what is left after specific gifts and expenses, to the residuary beneficiaries.
  • Keep any sub-trusts running if the document creates them, such as a trust for a minor or a beneficiary who should not receive a lump sum.

To move real estate to a beneficiary, sign and record a trustee's deed with the county clerk where the land sits. Get a signed receipt for every distribution. A release a beneficiary signs is invalid to the extent it was induced by your improper conduct or the beneficiary did not know the facts (KRS 386B.8-170). After the final report goes out and the last asset changes hands, the trust is settled.

Watch the Surviving Spouse's Dower or Curtesy Claim

Kentucky protects a surviving spouse through dower and curtesy, not a Uniform Probate Code elective share (KRS 392.020). This matters to a trustee because the protection can reach trust assets. When a surviving spouse renounces the will and claims dower or curtesy, Kentucky folds property the decedent held in a revocable trust into the surplus the spouse can reach (KRS 392.020(5)), along with gifts the decedent made less than two years before death (KRS 392.020(6)). A funded revocable trust does not put those assets beyond a renouncing spouse's reach. If the settlor was married and the survivor may renounce, hold a reserve and confirm the combined figure before you distribute. The Kentucky surviving spouse rights guide works the calculation in full.

How This Fits Into Your Estate Plan

Trust administration works best when the rest of the plan is in place. A funded living trust holds and passes assets without probate, but it does not cover property left out of the trust. A valid Kentucky will, often a pour-over will, catches anything the settlor never moved in. A trustee's job overlaps with an executor's, so the Kentucky executor duties guide is worth a read if you serve in both roles.

If some assets were never retitled into the trust, the Kentucky probate guide explains the District Court process those assets may still need, and the Kentucky probate accounting guide covers the settlement a personal representative files. For where trusts sit among the planning documents, start with the Kentucky estate planning basics. To compare a trust with the other ways families keep assets out of court, see how to avoid probate in Kentucky. You can find your local court in the Kentucky probate court directory.

Common Questions

Does a Kentucky trustee have to notify beneficiaries within a set number of days?

Yes. Kentucky follows the Uniform Trust Code's clock. Under KRS 386B.8-130, you have 60 days after accepting the trusteeship to notify the qualified beneficiaries of your acceptance and contact details, and 60 days after you learn the trust became irrevocable at the settlor's death to notify them of the trust's existence, the settlor's identity, and their right to a copy of the trust and to a report.

Does a Kentucky trust go through probate?

Assets titled in the name of the trust pass under the trust terms without probate. Anything the settlor owned but never funded into the trust may still need probate in the District Court, which is why many plans include a pour-over will. See the Kentucky probate guide for the court process.

How often must a Kentucky trustee provide an accounting?

Under KRS 386B.8-130, on a qualified beneficiary's request you send a report at least once a year and again when the trust ends, showing the trust property, liabilities, receipts, disbursements, your compensation, and a listing of the assets with market values where feasible. A beneficiary can waive the report in writing and later withdraw the waiver.

Does Kentucky charge an inheritance or estate tax on a trust?

Kentucky has an inheritance tax but no effective estate tax. Class A beneficiaries such as a spouse, child, grandchild, parent, or sibling pay nothing, while Class B and Class C beneficiaries are taxed above small exemptions (KRS 140.070 and KRS 140.080). Evaluate the tax before distributing to anyone outside Class A. The estate tax (KRS 140.130) is dormant and produces no Kentucky tax on modern estates.

Can a Kentucky trustee be paid?

Under KRS 386B.7-080, if the trust does not set the fee, a trustee is entitled to compensation that is reasonable under the circumstances, and a court may allow more or less in narrow cases. You may also be reimbursed for expenses you properly incur (KRS 386B.7-090). Disclose any fee you take in your report.

The Bottom Line

As a Kentucky successor trustee, your duties come straight from the Kentucky Uniform Trust Code: accept the role, take control of the property, notify the qualified beneficiaries within the 60-day deadlines KRS 386B.8-130 sets, invest with the prudent-investor care KRS 386B.9-010 requires, pay debts and taxes including any Kentucky inheritance tax, report to the beneficiaries who ask, and hand out what remains under the trust terms. Work carefully, document each step, and pay debts before you pay beneficiaries. For real estate transfers, tax filings, or any dispute, a Kentucky trust attorney can keep a clean process from going sideways.

This guide is general information about Kentucky trust administration. Confirm anything that affects your situation with the District Court or a licensed Kentucky attorney.

Sources:

It is not legal advice.

Information current as of July 20, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in Kentucky can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

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