General Provisions

KRS tit. XXXIII, ch. 386A, subch. 1

in effect

KRS 386A.1-010 Short title

386A.1-010. Short title KRS 386A.1-010 to 386A.10-040 may be cited as the "Kentucky Uniform Statutory Trust Act (2012)." Effective: July 12, 2012 History: Created 2012 Ky. Acts ch. 81, sec. 1, effective July 12, 2012.

KRS 386A.1-020 Definitions for chapter

386A.1-020. Definitions for chapter As used in KRS 386A.1-010 to 386A.10-040: (1) "Appropriate court" means the circuit court for the county of the Commonwealth in which the statutory trust maintains its principal office or, if none, the county in which the registered office is located; (2) "Authorized foreign statutory trust" means a foreign statutory trust that is authorized to transact business in this Commonwealth pursuant to a certificate of authority issued by the Secretary of State; (3) "Beneficial owner" means the owner of a beneficial interest in a statutory trust or foreign statutory trust; (4) "Certificate of trust" means the certificate required by KRS 386A.2-010. The term includes the certificate as amended or restated; (5) "Common-law trust" means a fiduciary relationship with respect to property arising from a manifestation of intent to create that relationship and subjecting the person that holds title to the property to duties to deal with the property for the benefit of charity or for one (1) or more persons, at least one (1) of which is not the sole trustee, whether the purpose of the trust is donative or commercial. The term includes the type of trust known at common law as a "business trust," "Massachusetts trust," or "Massachusetts business trust"; (6) "Constituent organization" means an organization that is party to a merger; (7) "Constituent statutory trust" means a constituent organization that is a statutory trust; (8) "Converted organization" means the organization into which a converting organization converts; (9) "Converted statutory trust" means a converted organization that is a statutory trust; (10) "Converting organization" means an organization that converts into another organization; (11) "Converting statutory trust" means a converting organization that is a statutory trust; (12) "Covered party" means a trustee, officer, employee, or manager of a statutory trust, a related party of a trustee, officer, employee, manager, and any other person designated pursuant to KRS 386A.1-030(4)(h); (13) "Distribution" means a transfer of money or other property from a statutory trust or a series on account of a beneficial interest, and includes redemption or other purchase of a beneficial interest by a statutory trust; (14) "Entity" has the meaning set forth in KRS 14A.1-070; (15) "Foreign series trust" means a foreign statutory trust that has one (1) or more series that under the laws of its jurisdiction of organization provides rules substantially equivalent to KRS 386A.4-020(1); (16) "Foreign entity" has the same meaning as set forth in KRS 14A.1-070; (17) "Foreign statutory trust" means a trust that is formed under the laws of a jurisdiction other than this Commonwealth which would be a statutory trust if formed under the laws of this Commonwealth; (18) "Governing instrument" means the trust instrument and certificate of trust; (19) "Governing law" means the law that governs an organization's internal affairs; (20) "Jurisdiction," used to refer to a political entity, means the United States, a state, a foreign country, or a subdivision of a foreign country; (21) "Organization" means a common-law trust that does not have a predominantly donative purpose; general partnership, including a limited liability partnership; limited partnership, including a limited liability limited partnership; limited liability company; corporation; or foreign statutory trust. The term includes a domestic or foreign organization whether or not organized for profit; (22) "Organizational documents" means the records that create an organization and determine its internal governance and the relations among the persons that own it, have an interest in it, or are members of it; (23) "Person" means an individual, profit or nonprofit corporation, statutory trust, estate, partnership, limited partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. The term does not include a common-law trust; (24) "Principal office" has the same meaning as set forth in KRS 14A.1-070; (25) "Professional service" means the personal services rendered by physicians, osteopaths, optometrists, podiatrists, chiropractors, dentists, nurses, pharmacists, psychologists, occupational therapists, veterinarians, engineers, architects, landscape architects, certified public accountants, public accountants, physical therapists, or attorneys; (26) "Property" means all property, whether real, personal, or mixed, or tangible or intangible, or any interest therein; (27) "Record," used as a noun, means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form; (28) "Related party," with respect to a party that is a trustee, officer, employee, manager, or beneficial owner, means: (a) The spouse of the party; (b) A child, parent, sibling, grandchild, or grandparent of the party, or the spouse of one (1) of them; (c) An individual having the same residence as the party; (d) A trust or estate of which a related party described in subparagraphs (a), (b), or (c) of this subsection is a substantial beneficiary; (e) A trust, estate, legally incapacitated individual, conservatee, or minor for which the party is a fiduciary; or (f) A person that directly or indirectly controls, is controlled by, or is under common control with, the party; (29) "Series trust" means a statutory trust that has one (1) or more series created under Subchapter 4 of this chapter; (30) "Sign" means, with the present intent to authenticate or adopt a record: (a) To execute or adopt a tangible symbol; or (b) To attach to or logically associate with the record an electronic symbol, sound, or process; (31) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States; (32) "Statutory trust," except in the phrase "foreign statutory trust," means an entity formed under this chapter; (33) "Surviving organization" means an organization into which one (1) or more other organizations are merged, whether the surviving organization pre-existed the merger or was created by the merger; (34) "Trust" includes a common-law trust, statutory trust, and foreign statutory trust; (35) "Trust instrument" means a record other than the certificate of trust which provides for the governance of the affairs of a statutory trust and the conduct of its business. The term includes a trust agreement, a declaration of trust, and bylaws; and (36) "Trustee" means a person designated, appointed, or elected as a trustee of a statutory trust or foreign statutory trust in accordance with the governing instrument or applicable law. Effective: July 12, 2012 History: Created 2012 Ky. Acts ch. 81, sec. 2, effective July 12, 2012.

KRS 386A.1-030 Governing instrument

386A.1-030. Governing instrument (1) Except as otherwise provided in KRS 386A.1-040(2), the governing instrument governs: (a) The management, affairs, and conduct of the business of a statutory trust; and (b) The rights, interests, duties, obligations, and powers of, and the relations among, the trustees, the beneficial owners, the statutory trust, and other persons. (2) To the extent the governing instrument does not otherwise provide for a matter described in subsection (1) of this section, this chapter governs the matter. (3) The governing instrument may include one (1) or more instruments, agreements, declarations, bylaws, or other records and refer to or incorporate any record. (4) Subject to KRS 386A.1-040(2), without limiting the terms that may be included in a governing instrument, the governing instrument may: (a) Provide the means by which beneficial ownership is determined and evidenced; (b) Limit a beneficial owner's right to transfer a beneficial interest; (c) Provide for one (1) or more series under Subchapter 4 of this chapter; (d) To the extent that voting rights are granted to the beneficial owners or trustees under the governing instrument, include terms relating to: 1. Notice of the date, time, place, or purpose of any meeting at which any matter is to be voted on; 2. Waiver of notice; 3. Action by consent without a meeting; 4. Establishment of record dates; 5. Quorum requirements; 6. Voting: a. In person; b. By proxy; c. By any form of communication that creates a record, telephone, or video conference; or d. In any other manner; or 7. Any other matter with respect to the exercise of the right to vote; (e) Provide for the creation of one (1) or more classes of trustees, beneficial owners, or beneficial interests having separate rights, powers, or duties; (f) Provide for any action to be taken without the vote or approval of any particular trustee or beneficial owner, or classes of trustees, beneficial owners, or beneficial interests, including: 1. Amendment of the governing instrument; 2. Merger, conversion, or reorganization; 3. Appointment of trustees; 4. Sale, lease, exchange, transfer, pledge, or other disposition of all or any part of the property of the statutory trust or the property of any series thereof; and 5. Dissolution of the statutory trust; (g) Provide for the creation of a statutory trust, including the creation of a statutory trust to which all or any part of the property, liabilities, profits, or losses of a statutory trust may be transferred or exchanged, and for the conversion of beneficial interests in a statutory trust, or series thereof, into beneficial interests in the new statutory trust or series thereof; (h) Provide for the appointment, election, or engagement of agents or independent contractors of the statutory trust or delegates of the trustees, or agents, officers, employees, managers, committees, or other persons that may manage the business and affairs of the statutory trust, designate their titles, and specify their rights, powers, and duties; (i) Provide rights to any person, including a person who is not a beneficial owner or not otherwise a party to the governing instrument, to the extent set forth therein; (j) Subject to paragraph (k) of this subsection, specify the manner in which the governing instrument may be amended, including, unless waived by all persons for whose benefit the condition or requirement was intended: 1. A condition that a person that is not a party to the instrument must approve the amendment for it to be effective; and 2. A requirement that the governing instrument may be amended only as provided in the governing instrument or as otherwise permitted by law; (k) Provide that a person may comply with paragraph (j) of this subsection by a representative authorized by the person orally, in a record, or by conduct; (l) Provide that a person becomes a beneficial owner, acquires a beneficial interest, and is bound by the governing instrument if the person complies with the conditions for becoming a beneficial owner set forth in the governing instrument; (m) Provide that the beneficial interest of any beneficial owner who fails to make any contribution that the beneficial owner is obligated to make or who otherwise violates an obligation undertaken in the governing instrument shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of reducing or eliminating the defaulting beneficial owner's proportionate interest in the statutory trust, subordinating the beneficial owner's interest to that of nondefaulting beneficial owners, a forced sale of that beneficial interest, forfeiture of his or her beneficial interest, the lending by other beneficial owners of the amount necessary to meet the defaulting beneficial owner's commitment, a fixing of the value of his or her beneficial interest by appraisal or by formula and redemption or sale of the beneficial interest at such value, or other penalty or consequence; (n) Provide that the statutory trust or the trustees, acting for the statutory trust, hold beneficial ownership of any income earned on securities held by the statutory trust that are issued by any business entity formed, organized, or existing under the laws of any jurisdiction; (o) Provide for the establishment of record dates; (p) Grant to, or withhold from, a trustee or beneficial owner, or class of trustees or beneficial owners, the right to vote, separately or with any or all other trustees or beneficial owners, or class of trustees or beneficial owners, on any matter; (q) Provide that neither the power to direct a trustee or other person nor the exercise of the power by any person, including a beneficial owner, causes the person to be a trustee or imposes on the person duties, including fiduciary duties, or liabilities relating to these duties, to a statutory trust or beneficial owner; (r) Provide that the statutory trust is to act as a beneficial owner associated with a series thereof; or (s) Provide that each beneficial owner shall be the owner of an undivided beneficial interest in all property of the statutory trust in addition to or including an undivided beneficial interest in all property of or associated with a series of the statutory trust with which the beneficial owner is associated. Effective: June 24, 2015 History: Amended 2015 Ky. Acts ch. 34, sec. 60, effective June 24, 2015. -- Created 2012 Ky. Acts ch. 81, sec. 3, effective July 12, 2012.

KRS 386A.1-040 Mandatory rules

386A.1-040. Mandatory rules (1) Except as otherwise provided in subsection (2) of this section, relations among the statutory trust, the beneficial owners, and the trustees are governed by the governing instrument. To the extent the governing instrument does not otherwise provide, KRS 386A.1-010 to 386A.10-040 govern relations among the statutory trust, the beneficial owners, and the trustees. (2) The governing instrument may not: (a) Eliminate the obligation of good faith and fair dealing in the governing instrument, but it may prescribe the standards by which the performance of the obligations are to be measured provided the standards are not manifestly unreasonable; (b) Vary KRS 386A.1-050(3), (5), or (7); (c) Vary the requirements of Subchapter 2 of this chapter; (d) Vary KRS 386A.3-010; (e) Negate KRS 386A.3-030(2); (f) Except as provided therein, vary the provisions pertaining to series trusts in Subchapter 4 of this chapter; (g) Vary KRS 386A.5-010(2); (h) Vary KRS 386A.5-020(2); (i) Vary KRS 386A.5-030(3); (j) Vary the standards of conduct for trustees under KRS 386A.5-050, but the governing instrument may prescribe the standards by which good faith, best interests of the statutory trust, and care that a person in a similar position would reasonably believe appropriate under similar circumstances are determined, if the standards are not manifestly unreasonable; (k) Vary KRS 386A.5-070, but the governing instrument may provide a mechanism for prior approval, upon full disclosure, of a transaction with a covered party by at least two (2) disinterested trustees or the disinterested beneficial owners; (l) Restrict the right of a trustee to information under KRS 386A.5-080, but the governing instrument may prescribe the standards for assessing whether information is reasonably related to the trustee's discharge of the trustee's duties as trustee, if the standards are not manifestly unreasonable; (m) Vary KRS 386A.5-100(2); (n) Vary KRS 386A.5-110(3) and (4); (o) Vary KRS 386A.6-010(4); (p) Restrict the right of a judgment creditor of a beneficial owner to seek a charging order under KRS 386A.6-060; (q) Provide indemnification, advancement of expenses, or exoneration for conduct involving bad faith, willful misconduct, self-dealing, reckless indifference, approval or consent to a distribution violating KRS 386A.6-080, or a transaction from which the trustee derived an improper personal benefit or in which the trustee's personal financial interest was in conflict with those of the statutory trust; (r) Permit a trustee to follow a direction that is contrary to the terms of the governing instrument or would constitute a breach of fiduciary duty by the trustee; (s) Vary KRS 386A.6-080(3), (4), (6), or (7); (t) Vary KRS 386A.6-090; (u) Restrict the right of a beneficial owner to information under KRS 386A.6-100, but the governing instrument may prescribe the standards for assessing whether information is reasonably related to the beneficial owner's interest, if the standards are not manifestly unreasonable; (v) Restrict the right of a beneficial owner to bring an action under KRS 386A.6- 110; (w) Vary Subchapter 7 of this chapter; (x) Except to the extent expressly provided therein, vary Subchapter 8 of this chapter; (y) Vary Subchapter 9 of this chapter; or (z) Vary Subchapter 10 of this chapter. Effective: July 12, 2012 History: Created 2012 Ky. Acts ch. 81, sec. 4, effective July 12, 2012.

KRS 386A.1-050 Applicability of trust and other law

386A.1-050. Applicability of trust and other law (1) The law of this Commonwealth pertaining to common-law trusts supplements this chapter. (2) A governing instrument may supersede or modify application to the statutory trust of any law of this Commonwealth pertaining to common-law trusts. (3) Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter. (4) Although this chapter is in derogation of common law, the rule of construction requiring strict construction of statutes which are in derogation of common law shall not apply to its provisions. (5) Each statutory trust and each foreign statutory trust is subject to KRS Chapter 14A. (6) If an obligation to pay interest arises under this chapter and the rate is not specified, the rate is that specified in KRS 360.010. (7) For purposes of KRS 141.0401, each statutory trust and foreign statutory trust and each series of a series trust or of a foreign series trust shall be treated as a limited liability pass-through entity. Effective: July 12, 2012 History: Created 2012 Ky. Acts ch. 81, sec. 5, effective July 12, 2012.

KRS 386A.1-060 Rule of construction

386A.1-060. Rule of construction (1) It shall be the policy of the Commonwealth through this chapter to give maximum effect to the principles of freedom of contract and the enforceability of governing instruments. (2) Except to the extent set forth in a governing instrument, a statutory trust is bound by the governing instrument. (3) Except to the extent set forth in the governing instrument, each trustee of a statutory trust is bound by the governing instrument. (4) Action validly taken pursuant to one (1) provision of this chapter shall not be deemed invalid solely because it is identical or similar in substance to an action that could have been taken pursuant to some other provision of this chapter but fails to satisfy one (1) or more requirements prescribed by such other provision. (5) No beneficial owner or other person shall have a vested property right resulting from any provision of the governing instrument which may not be modified by its amendment or as otherwise permitted by law. (6) Each beneficial owner and trustee and any other party to a governing instrument shall discharge all duties and exercise all rights consistently with the obligation of good faith and fair dealing. (7) If a governing instrument contains a provision to the effect that any amendment to the governing instrument shall be in writing and adopted in accordance with the provisions of the governing instrument, then the provision shall be enforceable in accordance with its terms, and any agreement as to the conduct of the business and affairs of the statutory trust which is not in writing and adopted in accordance with the provisions of the governing instrument shall not be considered part of the governing instrument and shall be void and unenforceable. (8) A statutory trust governed by this chapter is subject to any amendment or repeal thereof. (9) This chapter shall not be construed to impair the obligations of any contract existing when this chapter, or any amendment of it, becomes effective, nor to affect any action or proceeding begun or right accrued before the chapter or amendment takes effect. Effective: July 12, 2012 History: Created 2012 Ky. Acts ch. 81, sec. 6, effective July 12, 2012.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=41154Fetched: 10/20/2026