Trust Amendment, Modification & Decanting
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TRUSTS — NEW KENTUCKY LAW
Trust Amendment, Modification and Decanting in Kentucky
Trusts are written to last decades, and circumstances do not cooperate. A trustee dies or becomes unsuitable, a beneficiary develops a disability, tax law changes, the terms turn out to be unworkable, or a provision that made sense in 2004 now defeats the whole purpose of the trust.
A revocable trust can simply be amended or restated. An irrevocable trust is harder, and until recently Kentucky had comparatively few tools for it. That changed on July 15, 2026, when Kentucky adopted the Uniform Trust Decanting Act.
Kentucky now has a statutory decanting mechanism where it previously had none, and it applies to trusts created before that date as well as after. For families stuck with an irrevocable trust that no longer works, this is a genuinely new option.
If you have an irrevocable trust that no longer fits, the law changed in your favour. Call (502) 348-2108.
Amending a Revocable Trust
If your trust is revocable, changing it is straightforward, and there are two routes with a meaningful practical difference.
An amendment is a short document changing specific provisions and leaving the rest intact. It suits a single discrete change, such as replacing a successor trustee or adjusting one beneficiary share.
A restatement rewrites the trust from beginning to end while keeping the original trust in existence. That distinction matters enormously for funding: because the trust itself never terminates, the deed to your home and your retitled accounts remain valid and nothing has to be transferred again. Where several changes are needed, or where a trust has accumulated a stack of amendments that now have to be read together, a restatement is almost always the cleaner answer.
Kentucky New Decanting Statute
This is the significant development, and it is new enough that most Kentucky families and a good many advisers are not yet aware of it.
What decanting is
Decanting is the exercise by a trustee of a discretionary distribution power to distribute trust property to a second trust with different terms, rather than outright to a beneficiary. The metaphor is pouring wine from one vessel into another. It allows an irrevocable trust to be improved without going to court and without the consent of everyone involved, within limits.
What Kentucky adopted, and when
The Uniform Trust Decanting Act was enacted as a new subchapter of the Kentucky Uniform Trust Code, at KRS 386B.13-010 and following, by 2026 Ky. Acts ch. 134, effective July 15, 2026. Before that Kentucky had no decanting statute at all, and the options for a problematic irrevocable trust were nonjudicial settlement agreement, court modification, or living with it. The Act sets out what an authorised fiduciary may do, distinguishing between those with expanded distributive discretion and those whose discretion is limited to an ascertainable standard, and it imposes notice requirements, fiduciary duties and tax-related limitations.
Importantly for existing trusts, the governing-law provision at KRS 386B.13-040 is expressed to apply before, on or after July 15, 2026. A trust drafted in 1998 is not excluded because it predates the statute.
Routes to Changing an Irrevocable Trust
Decanting
Distribution to a second trust with improved terms under KRS 386B.13-010 and following. Now the leading option in many cases, and it does not require court involvement.
Nonjudicial settlement agreement
Kentucky permits interested parties to resolve certain matters by agreement without a court, under KRS 386B.1-090, subject to limits on what may be agreed.
Modification by consent
The Kentucky Uniform Trust Code allows modification or termination with the consent of the settlor and beneficiaries, or of beneficiaries alone in defined circumstances, under KRS 386B.4-110 and following.
Unanticipated circumstances
A court may modify administrative or dispositive terms where circumstances not anticipated by the settlor mean modification would further the trust purposes.
Reformation and tax objectives
Kentucky provides for reformation to correct mistakes and for modification to achieve a settlor tax objectives.
Uneconomic trusts
Where a trust is too small to justify the cost of administration, the Code provides a route to terminate it.
Why Families Decant
The reasons are practical rather than theoretical, and most of them arise from a change nobody could have planned for.
The most compelling is a beneficiary who has developed a disability. A trust drafted to pay a share outright at thirty-five will, if that beneficiary now receives means-tested benefits, hand them a disqualifying sum. Kentucky new Act includes a dedicated provision for a trust for a beneficiary with a disability at KRS 386B.13-120, permitting a special-needs fiduciary to decant into a trust that protects eligibility. That single provision will rescue plans that would otherwise have failed.
Other common reasons include correcting administrative provisions that have become unworkable, changing trustee succession where the named people are gone or unsuitable, consolidating several small trusts, extending a distribution age for a beneficiary who cannot yet manage money, and adapting to tax changes the settlor could not have foreseen.
What decanting is not is a way to rewrite a trust freely. The trustee is exercising a distribution power and remains bound by fiduciary duty, the Act limits what can be changed depending on the scope of that discretion, notice must be given, and beneficial interests cannot simply be redirected at will.
When to Look at an Existing Trust
These are the circumstances that most often mean a trust no longer does what it should.
01
A beneficiary now receives benefits
The most urgent case. An outright distribution to someone on Supplemental Security Income or Medicaid can cost them eligibility. See third-party special needs trusts.
02
The trustee cannot serve
Named trustees die, move away, fall ill or fall out with the family, and the succession provisions turn out to be exhausted or unworkable.
03
The trust predates July 2026
Kentucky adopted decanting and directed trusts effective July 15, 2026, and rewrote parts of its inheritance law the same day. Older trusts were drafted against a different legal background.
04
Distribution ages that no longer fit
A beneficiary with creditor problems, an addiction, or simply an inability to manage a lump sum, facing a mandatory outright distribution.
05
Tax provisions built for a vanished problem
Bypass and credit shelter machinery drafted for a much lower federal exemption, now adding cost and complexity for a tax the family will never pay.
If you are the trustee of a trust that no longer works, you may have more options than you did last year. (502) 348-2108.
Directed Trusts, Also New in Kentucky
The same 2026 legislation introduced a second significant change, and it is worth knowing about when considering how to restructure a trust.
Kentucky adopted the Uniform Directed Trust Act at KRS 386B.12-010 and following, effective July 15, 2026, replacing the much thinner provision previously found at KRS 386B.8-080, which has been repealed.
A directed trust separates the role of holding and administering trust property from the power to direct particular decisions. A trust director, sometimes called a trust protector, may be given authority over investments, distributions or other defined matters, while the directed trustee administers the trust subject to that direction. The Act applies the same fiduciary duties to a trust director as to a trustee, and correspondingly limits the directed trustee duty and liability, including providing that a directed trustee has no duty to monitor, inform or advise.
For families this opens structures that were awkward under prior Kentucky law: a corporate trustee handling administration while a family member retains authority over the family business or the farm, for example. It is worth considering when a trust is being restructured rather than treated as a separate topic.
- Revocable trust: amend for one change, restate for several
- Restating preserves funding; a new trust does not
- Irrevocable trust: decanting is now available in Kentucky
- Decanting applies to trusts created before July 15, 2026
- A special-needs fiduciary provision exists for beneficiaries with disabilities
- Nonjudicial settlement and court modification remain available
- Directed trust structures are now governed by a full statute
Trust Modification in Bardstown and Louisville
Thomas Hamilton has been admitted to the Kentucky bar since 2011 and has concentrated on elder law and estate planning since 2014. He is a member of the Kentucky Bar Association Elder Law Section and the National Academy of Elder Law Attorneys.
We advise trustees and families across Nelson, Bullitt, Washington, Marion, Larue, Hardin, Anderson, Spencer and Jefferson counties, from 117 E. Stephen Foster Avenue in Bardstown and the First Trust Centre, 200 S. 5th Street in Louisville.
Because the decanting and directed trust statutes are only weeks old, we will be clear about where the law is settled and where it is not yet tested. The initial consultation is free. Schedule a consultation.
Mistakes When Changing a Trust
Writing changes on the trust document
Handwritten alterations are ineffective and cast doubt on the whole instrument. Changes must be made with the same formality as the original.
Creating a new trust instead of restating
A new trust has to be funded all over again, with new deeds and new account retitling. A restatement keeps the existing trust and its funding intact.
Assuming an irrevocable trust cannot be changed
Frequently untrue, and now less true than ever. Decanting, nonjudicial settlement and court modification all exist, and Kentucky added the first of those only this year.
Decanting without regard to fiduciary duty
A trustee exercising a distribution power remains a fiduciary. The Act imposes duties, notice requirements and limits, and it is not a licence to rewrite beneficial interests.
Overlooking a beneficiary who is now on benefits
The change most likely to cause real harm if missed, and the one Kentucky new special-needs fiduciary provision is designed to address.
Amending a trust and forgetting the will
A pour-over will, powers of attorney and beneficiary designations all sit alongside the trust. Changing one and not the others creates contradictions.
FREQUENTLY ASKED QUESTIONS
Common Questions About Changing a Trust
Can an irrevocable trust be changed in Kentucky?
Often yes. Kentucky adopted the Uniform Trust Decanting Act at KRS 386B.13-010 and following, effective July 15, 2026, allowing a trustee with discretionary distribution power to distribute trust property to a second trust with different terms. Nonjudicial settlement agreements and court modification under the Kentucky Uniform Trust Code also remain available.
What is the difference between amending and restating a trust?
An amendment changes specific provisions and leaves the rest in place. A restatement rewrites the trust entirely while keeping the original trust in existence, which means the deed to your home and your retitled accounts stay valid and nothing has to be funded again. Where more than one change is needed, restating is usually cleaner.
Does the new decanting law apply to a trust created years ago?
Yes. The governing-law provision at KRS 386B.13-040 is expressed to apply before, on or after July 15, 2026, so a trust drafted long before the statute is not excluded. That is what makes this significant for families who have been stuck with an irrevocable trust that no longer works.
Our trust leaves money outright to a child who is now disabled. Can that be fixed?
This is one of the clearest cases for decanting, and Kentucky new Act contains a dedicated provision at KRS 386B.13-120 for a trust for a beneficiary with a disability, allowing a special-needs fiduciary to decant into a trust that preserves eligibility for means-tested benefits. It should be addressed before any distribution falls due.
Can decanting be used to change who inherits?
Not freely. The trustee is exercising a distribution power and remains bound by fiduciary duty, and the Act limits what may be altered depending on whether the fiduciary has expanded or limited distributive discretion. Notice requirements apply and there are restrictions protecting charitable interests and tax positions. It is a tool for fixing trusts, not for redirecting them.
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CONTACT
Your Options Changed This Summer
Kentucky gained a decanting statute on July 15, 2026, and it reaches trusts written decades earlier. Call attorney Thomas Hamilton at (502) 348-2108 or use the form below.
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Address:
117 E. Stephen Foster Avenue, Bardstown, KY 40004