Land Trusts in Kentucky: What the Law Provides and What It Does Not
Unlike some states, Kentucky's conveyancing and trust statutes (KRS chapters 381, 382, 386 and 386B) contain no land trust act. A Kentucky land trust is an ordinary trust under the Uniform Trust Code (KRS chapter 386B) whose trustee holds record title. Privacy, lender comfort and tax treatment therefore depend on drafting and on a handful of Kentucky rules.
William J. Brown, our Managing Partner, is admitted in Kentucky.
What a Kentucky land trust can and cannot do
We found no title-holding trust statute in KRS chapters 381, 382, 386 or 386B. A deed to a trustee must still carry the grantee's full name and mailing address, the consideration statement and sworn certificates signed by both sides (KRS 382.135), and the preparer's name and address (KRS 382.335). Nothing in that list requires the deed to name the beneficiaries, and a trust need not be registered with the District Court unless the settlor directs it (KRS 386B.2-050).
Buyers and lenders get comfort from the trust code. A person dealing with a trustee in good faith need not inquire into the trustee's powers (KRS 386B.10-110). The trustee may furnish a certification of trust covering the settlor, the trustee, the powers, revocability and the manner of taking title instead of the trust agreement, though the recipient may still require excerpts granting power to act (KRS 386B.10-120).
Tax and creditor rules cut both ways. The $0.50 per $500 transfer tax does not apply to a deed to a trustee when the grantor is the sole beneficiary, or when a direct transfer to all the beneficiaries would have been exempt, and a trustee-to-successor-trustee deed is exempt (KRS 142.050(7)(n), (8)). A land trust is not a creditor shield. An ordinary land trust you create for yourself leaves your interest open to your creditors despite a spendthrift clause (KRS 386B.5-020(7)(a)), and a revocable trust stays reachable during your life (KRS 386B.5-040(1)(a)).
Trust and Deed Drafting
A trust agreement and deed to the trustee that meet KRS 382.135 and 382.335 and set out the trustee's powers.
Lender and Title Coordination
A certification of trust under KRS 386B.10-120 for the title insurer and lender, ahead of closing.
Transfer Tax Review
Whether the deed to the trustee falls under the KRS 142.050(8) exemption, given who the beneficiaries are.
Pairing with an LLC
Where liability protection is the goal, combining the trust with a Kentucky LLC rather than relying on the trust alone.
Is there a land trust law in Kentucky?
No. Kentucky's conveyancing and trust statutes (KRS chapters 381, 382, 386 and 386B) contain no land trust act. A land trust here is an ordinary trust governed by KRS chapter 386B, with a trustee holding record title.
Does a land trust keep my name off Kentucky property records?
The recorded deed names the trustee, not the beneficiaries, and a trust is registered only if the settlor directs (KRS 386B.2-050). Lenders and title insurers will still ask who the beneficiaries are, and the sworn consideration certificates are signed by the parties to the deed.
Do I owe transfer tax when I deed property to my own trust?
Not if you are the sole beneficiary, or if a direct transfer to every beneficiary would have been exempt (KRS 142.050(8)).
Will my lender call the loan if I put my home in a trust?
For residential property of fewer than five units, federal law bars a due-on-sale demand on a transfer into an inter vivos trust in which you remain a beneficiary and keep occupancy rights (12 U.S.C. 1701j-3(d)(8)). Other loans follow their documents.
Facing a land trust question in Kentucky?
The first consultation is confidential, and we respond within one business day.