Kentucky

Kentucky probate is heard in the District Court of the county where the deceased lived. The
court issues letters testamentary to the executor, or letters of administration where
there is no will. Uncontested estates are largely a paperwork exercise; a will contest goes to
the Circuit Court.

The Kentucky inheritance tax is the thing to plan for

Kentucky is one of the few states that still taxes the beneficiary rather than the estate, and
the rate turns entirely on the relationship:

Confirm current classes and rates with the Department of Revenue.

Note that siblings are Class A and exempt in Kentucky — the opposite of New Jersey and
Pennsylvania, which both tax them. The people who actually get caught here are nieces and
nephews, at Class B rates.

The nine-month discount

Pay the inheritance tax within nine months of the date of death and Kentucky allows a 5%
discount on the amount paid. It is real money and it is easy to miss while the estate is still
being gathered.

Also worth knowing

Kentucky has retained dower and curtesy — a surviving spouse's statutory interest in the
deceased's property — which sits alongside the will and can override it.

No estate tax

Kentucky imposes no separate estate tax beyond the inheritance tax.

An attested Kentucky will must be in writing, signed by the testator (or by another in
their presence and at their direction), and subscribed by two witnesses in the testator's
presence. The testator must be 18 or older and of sound mind.

Holographic wills are valid

Kentucky accepts a will wholly written, dated and signed in the testator's own handwriting,
with no witnesses at all. The date is a requirement here, not merely sensible — an undated
holographic will is vulnerable.

It is valid, and it is still the format that most often reaches a Kentucky court as an argument
rather than an application. A handwritten will does not name an alternate executor, rarely
disposes of the residue, and does nothing about the inheritance tax.

Draft around the inheritance tax

This is where a Kentucky will earns its fee. Siblings are exempt, which surprises people, but
nieces and nephews are Class B and taxed from $1,000 upward, and a friend, cousin or unmarried
partner is Class C and taxed from $500 upward.

Whom you name changes what they actually receive by a wide margin. Decide expressly whether the
tax falls on the individual gift or on the residue — the will can direct it, and if it says
nothing the default may not be what you intended.

Remember dower and curtesy

A surviving spouse has a statutory interest in the deceased's property regardless of the will.
Drafting as though the will controls everything is a mistake in Kentucky.

Also

• Name an alternate executor and consider waiving bond.
• Attach a self-proving affidavit before a notary.
• Review after a marriage, divorce, birth or a move to Kentucky.

Yes, and Kentucky caps it by statute in two parts.

The statutory ceiling

Under KRS 395.150 the compensation of an executor, administrator or curator shall not exceed:

• 5% of the value of the personal estate of the deceased, plus
• 5% of the income collected by the representative for the estate.

Confirm the current figures against the statute.

Personal estate, not everything

The base is the personal estate. Real property that simply passes to the beneficiaries is not
in it, so an estate consisting largely of a farm or a house generates far less commission than
its headline value suggests. This catches executors out.

Additional compensation for additional work

The statute expressly allows the court to grant further compensation on proof that the
representative performed additional services in the administration — such amount as would be
fair and reasonable for that extra work. Where an estate involved litigation, a business, or real
property that took two years to sell, that is the provision to rely on rather than quietly
inflating the base.

How it is approved

Compensation is claimed in the settlement filed with the District Court, or agreed in writing by
all the beneficiaries. Settle it before taking it.

If the will fixes the figure

A will provision governs where the executor accepts the appointment on those terms.

The inheritance tax angle

Compensation is taxable income to the executor, but a deductible expense for the Kentucky
inheritance tax. Where the executor is a Class A beneficiary — exempt from inheritance tax
anyway — taking a fee converts an untaxed inheritance into taxable income for no benefit. Where
they are Class B or C, the arithmetic can go the other way. Ask an accountant which case applies.

A Kentucky executor is reimbursed from the estate for the reasonable expenses of
administration, separately from the statutory commission. Most are also deductible against the
inheritance tax, so recording them properly is worth money wherever a Class B or C beneficiary
is involved.

Normally claimable

• Funeral, burial or cremation, the headstone, and a reasonable reception.
• District Court filing fees, certified letters, certified death certificates, and publication
  where required.
• Attorney's fees, and accountant's fees for the final Form 1040, any Form 1041, and the
  Kentucky inheritance tax return.
• Appraisals of real property, farmland, tobacco or bourbon barrel inventory, horses and
  equine interests, vehicles, firearms and collections. Equine valuation is specialist work in
  this state and worth paying for properly.
• Carrying costs on estate property until sale: insurance, property tax, utilities, security,
  maintenance, fencing repair, lawn care and snow removal.
• On a farm, the genuine costs of keeping livestock fed and land maintained through a season
  where continuing is in the estate's interest.
• Cleaning, clearing, storing, moving and shipping contents.
• Travel on estate business at a reasonable rate.
• Bond premiums where the will did not waive bond.

Normally not claimable

• The executor's lost wages, meals near home, or personal spending.
• Costs run up for one beneficiary's convenience rather than the estate's.
• Improvements beyond preparing a property for sale as it stands.
• Anything without a receipt.

The rule that decides it

Open an estate bank account and run everything through it. Every documented expense reduces
the inheritance tax base — so a receipt you fail to keep can be taxed at up to 16% depending on
who inherits.

Most Kentucky estates are administered by a family member working with the District Court. A
bank trust department or an attorney serving as executor earns its cost in specific cases.

Consider a professional when

• Beneficiaries fall into Class B or Class C — nieces, nephews, cousins, friends, an unmarried
  partner — and the inheritance tax has to be planned, apportioned and filed correctly. Getting
  the apportionment clause right can be worth more than the fee.
• The nine-month discount is achievable. An estate that engages an accountant in the first
  month rather than the eighth can capture a 5% saving on the tax, which frequently covers a
  meaningful share of the professional cost.
• The estate holds farmland, an equine operation, bourbon inventory, or coal and mineral
  interests. Each of these has a valuation problem of its own, and horses and barrels do not
  wait while an executor works out what to do.
• There is conflict among the beneficiaries, or a will contest looks likely — which moves the
  matter to the Circuit Court.
• A dower or curtesy claim by a surviving spouse cuts across the will.
• A beneficiary is a minor or incapacitated, so a trust runs for years.
• The named executor lives out of state. Kentucky generally requires a non-resident executor
  to have a resident co-fiduciary or agent — check before naming one.

What it costs

Corporate fiduciaries charge a negotiated percentage, referenced to the KRS 395.150 ceiling,
usually with a minimum annual fee. Attorneys generally bill hourly. Ask for either in writing.

Middle ground

Appoint a family member, waive bond, and let them retain a Kentucky attorney and an accountant
at the estate's expense — early, so the nine-month discount is still in reach.