Class A beneficiaries: spouse, parent, child, grandchild, brother, and sister have an unlimited exemption.Kentucky has a state income tax, structured as a flat tax on income.
The tax rate is 3.5% for 2026.
Kentucky imposes an inheritance tax. The inheritance tax rate and exemption amount depends on the relationship between the decedent and the beneficiary.
Class A beneficiaries: spouse, parent, child, grandchild, brother, and sister have an unlimited exemption.
Class B beneficiaries: niece, nephew, daughter-in-law, son-in-law, aunt, uncle, great grandchild have an exemption of $1,000 and a tax rate that begins at 4% for the initial $9,500 and goes up to 16% over $500,000.
Class C beneficiaries are all other persons who have an exemption of $500 and a tax rate that begins at 6% for the initial $9,500 and goes up to 16% over $500,000.
Full exemption for life insurance proceeds payable to a named beneficiary or trust other than the insured's estate.
Kentucky imposes an estate tax equal to the maximum credit permitted for paid state estate and inheritance taxes under IRC Sec. 2011. However, the current the federal tax code does not permit a credit for state estate or inheritance taxes paid. Therefore, there is no credit estate tax in effect at this time.
Kentucky does not impose a GST tax.
Kentucky does not impose a gift tax.
The minimum age of a person competent to make a will is 18 (but a minor may appoint a guardian for his child by will, or pursuant to a power of appointment).
The number of witnesses necessary to execute a will is two.
The original custodial gift may be a life insurance policy or annuity contract.
Custodial property may be invested in or used to pay premiums on (1) a policy on the minor's life if the minor's estate is the sole beneficiary, or (2) a policy on a third party in whom the minor has an insurable interest, if the minor or the custodian is the irrevocable beneficiary.
The custodial arrangement terminates when:
The minor child reaches age 18, or
The minor child dies.
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Each state describes its own distribution pattern of how property passes to a decedent's spouse, children, parents and siblings. If no such individuals are living, state laws specify other takers among more distant ancestors before awarding property to the state through "escheat" provisions. We do not trace devolution of property beyond those noted above, but cite appropriate statutes for those interested in additional detail.
Many states refer to their distribution regime by simply stating that the heirs of predeceased individuals take "by representation." We use only the statutory verbiage, but may cite other statutory guidance when it exists.
States vary in the way they refer to descendants, using such terms as "issue" or simply children or grandchildren. We use the term "descendant," unless usage of different term adds clarity.
Some states address situations where misconduct or abuse causes forfeiture of a right to receive a share of the estate. Those interested in this information should see the state statutes.
The estate goes to the surviving spouse, but only as follows:
If no surviving children, descendants, parents or siblings—100% of the estate
If there are surviving children, those children and their descendants take:
100% of the estate
If there are no surviving children or descendants:
100% to surviving parent or parents equally (although special rules apply with respect to real estate acquired from a parent—see K.R.S. §391.020)
If there are no surviving children, descendants or parents:
100% of the estate goes to siblings and their descendants. When any or all of a class first entitled to inherit are dead, leaving descendants, descendants take per stirpes. See KRS §391.040.
If none of the above:
Intestacy laws outline further distribution steps to the level of grandparents, kindred and descendants. See K.R.S. §391.010(5), (6).
If no legally described recipient can be found, estate assets go to the commonwealth of Kentucky.
Click here for more information on intestacy.
Non-qualified Annuities: A total amount of $350 per month is protected from creditors.
Life Insurance Cash Value: Exempt from creditors of both the original owner and the insured.
Life Insurance Proceeds: The interest of the beneficiary is exempt from creditors of both the original owner and the insured (though not if the policy beneficiary is the original owner or the insured). Exempt from creditors of the beneficiary for debts incurred prior to the death of the insured/availability of the proceeds.
Digital Assets: Kentucky follows the Revised Uniform Fiduciary Access to Digital Assets Act to ensure that testators can retain control of their digital property and plan for its ultimate disposition.
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