Bench & Bar September/October 2026

IN THIS ISSUE: LEGISLATIVE UPDATE

KENTUCKY BAR ASSOCIATION SINCE 1871

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vol. 90 no. 5 THIS ISSUE OF THE KENTUCKY BAR

CONTENTS 2 President’s Page BY MATTHEW P. COOK

ASSOCIATION’S B&B-BENCH & BAR WAS PUBLISHED IN THE MONTH OF SEPTEMBER.

COMMUNICATIONS & PUBLICATIONS COMMITTEE EILEEN M. O’BRIEN chair , lexington PAUL ALLEY florence ELIZABETH M. BASS hendersonville , tenn . JENN L. BRINKLEY dayton , ohio KYLE R. BUNNELL lexington FRANCES E. CATRON CADLE lexington ALLISON I. CONNELLY lexington JAMES P. DADY bellevue JOHN M. GHAELIAN lexington P. FRANKLIN HEABERLIN prestonsburg JESSICA R. C. MALLOY louisville SANDRA J. REEVES corbin JOHN SCHAAF georgetown GERALD R. TONER louisville ZACHARY M. VAN VACTOR louisville SAMUEL W. WARDLE louisville LITANY L. WEBSTER cincinnati , ohio MICHELE M. WHITTINGTON lexington

FEATURE: LEGISLATIVE UPDATE

6 SB 50 – Big changes to the Estate and Trust laws of the Commonwealth BY WAYNE F. WILSON AND EASTON B. DEPP 10 Care to Predict? Kentucky’s New Prediction Markets Tax BY MARK F. SOMMER, TAYLOR E. ECLEBERRY, AND JASMINE M. COWEN 14 Strengthening Consumer Protection: The Kentucky Attorney General and the 2026 Legislative Session BY CHRIS LEWIS, JOHN GHAELIAN, AND JORDAN HASENBALG

COLUMNS

KATHRYN D. WILLIAMS louisville MARK A. WINSOR lawrenceburg

18 Young Lawyers Division BY CHRISTINE L. STANLEY 22 University of Louisville Louis D. Brandeis School of Law 24 University of Kentucky J. David Rosenberg College of Law 20 Northern Kentucky University Salmon P. Chase College of Law

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Effective Legal Writing BY MARCIA M. ZIEGLER

PUBLISHER JOHN D. MEYERS EDITOR EILEEN M. O’BRIEN

28 Law Practice Management BY STEPHEN EMBRY 30 Lawyer Wellbeing BY DR. ERIC Y. DROGIN 32 Ethics Corner BY SHELDON G. GILMAN 44 Kentucky Bar Foundation 50 KYLAP 52 Continuing Legal Education DEPARTMENTS

MANAGING EDITOR SHANNON H. ROBERTS DESIGN & LAYOUT JESI L. EBELHAR

THE B&B - BENCH & BAR (ISSN-1521-6497) IS PUBLISHED BI-MONTHLY BY THE KENTUCKY BAR ASSOCIATION, 514 WEST MAIN STREET, FRANKFORT, KY 40601-1812. PERIODICALS POSTAGE PAID AT FRANKFORT, KY AND ADDITIONAL MAILING OFFICES. ALL MANUSCRIPTS FOR PUBLICATION SHOULD BE SENT TO THE MANAGING EDITOR. PERMISSION IS GRANTED FOR REPRODUCTION WITH CREDIT. PUBLICATION OF ANY ARTICLE OR STATEMENT IS NOT TO BE DEEMED AN ENDORSEMENT OF THE VIEWS EXPRESSED THEREIN BY THE KENTUCKY BAR ASSOCIATION, ITS BOARD OF GOVERNORS, SECTIONS, DIVISIONS, COMMITTEES, OR MEMBERS. ANNUAL DUES AND IS NOT LESS THAN 50% FOR THE LOWEST SUBSCRIPTION PRICE PAID BY SUBSCRIBERS. FOR MORE INFORMATION, CALL (502) 564-3795. POSTMASTER SEND ADDRESS CHANGES TO: B&B - BENCH & BAR 514 WEST MAIN STREET FRANKFORT, KY 40601-1812 SUBSCRIPTION PRICE: $20 PER YEAR. MEMBERS SUBSCRIPTION IS INCLUDED IN

BAR NEWS

36 Portrait of a Justice: William “Bill” Graves

Shares History, Discusses Court Unification BY JAMIE NEAL, ADMINISTRATIVE OFFICE OF THE COURTS

40 KBA Welcomes New Chief Bar Counsel 42 Lawyer Wellbeing Study 60 Who, What, When and Where

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Cover and several inside graphics by ©istockphoto.com/JesiEbelhar

PRESIDENT'S PAGE

a time for and Milestones

Celebrations by matthew p. cook

only one appellate court known as the Court of Appeals and it was notoriously overworked and slow to render decisions. Judicial and Bar leaders recognized the need for a better system and went to work to edu cate the public and to seek reform. Proposed constitutional provisions were drafted and adopted in 1974 by the General Assembly and the proposed amendment was placed on the ballot for voters in November 1975. The proposed reform effort was opposed by rural county judges who were leery of giving up power. A number of influential Kentucky lawyers and judges spearheaded a campaign to educate voters and to advo cate for the passage of the Judicial Article. Chief among these advocates were Morton Holbrook of Owensboro, James Amato of Lexington, Nancy Lancaster of Frankfort, as well as Judge Henry Meigs II, University of Kentucky Law Professor Amos Eblen, Bar leaders Stanley Chauvin, Jr., William Rummage, Glenn Denham, Henry Strat ton, and Chief Justice John Palmore. For those interested in the history behind the judicial reform effort, I recommend an excellent book entitled “United At Last: The Judicial Article and the Struggle to Reform Kentucky’s Courts” by Kurt X. Metzmeier, Michael Whiteman, and Jason Nemes. In the election of November 1975, Kentucky voters passed the Judicial Article amend ment by a vote of 395,543 to 215,419 and it went into effect in 1976. The amendment

vote was successful in only 35 of the 120 counties, but there were big margins in the more populated counties that made the difference in the final outcome. The voters approved what became a model judicial system with a unified Court of Jus tice vested with the judicial power of the Commonwealth. Under the new constitu tional enactment, the chief justice was made the executive head of the Court of Justice and the current four-tiered court system (District, Circuit, Court of Appeals, and Supreme Court) was created. This enact ment also created a constitutional right of appeal (Kentucky Constitution Sec tion 115); granted the Supreme Court the authority to make rules of practice and procedure for the Court of Justice and to govern admission to the bar and the disci pline of members of the bar (Section 116); and established nonpartisan judicial elec tions (Section 117). In his forward to the book “United at Last,” former Chief Justice Joseph E. Lambert noted that “[t]hese provisions gave sub stance to other constitutional sections providing for separation of powers among the three departments of government.” He correctly noted that the Judicial Article “has survived the birthing process, grow ing pains, adolescence, and reached a robust maturity.” Kentucky lawyers should be proud of the Judicial Article and celebrate the positive

2026 is a milestone year worthy of celebra tion. First and foremost, 2026 is the United States of America’s Semiquincentennial – the 250 th anniversary of the signing of the Declaration of Independence on July 4, 1776. In addition to fireworks and cook outs, I hope you’ve had the opportunity to reflect on the importance of this national anniversary. We are blessed to live in this country where freedom is the bedrock principle of our identity. 250 years after our revolutionary founding, the Declaration of Independence still challenges us to keep working together to build a better country where all of our citizens are free to exercise what Jefferson called our unalienable rights – life, liberty, and the pursuit of happiness. In addition, this is a milestone year for Ken tucky as we celebrate the 50 th anniversary of the passage of the Judicial Article of our state’s Constitution. Prior to the passage of this judicial reform effort by the citizens of the Commonwealth, Kentucky courts operated under the 1891 State Constitution. Under that anachronistic system, Kentucky had a hodgepodge of misdemeanor courts that were presided over largely by non-law yer judges. There were county courts, police courts, municipal courts and it was common for the judges in these courts to have no training in the law. This model led to inconsistent justice across the state and a number of inefficiencies that cried out for change. Likewise, the appellate system was badly in need of reform. There was then

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Your best choice is to proceed with caution.

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PRESIDENT'S PAGE

and service to others. He is an inspiration to all lawyers. He is a most worthy recipient of the ABA’s highest honor. We are proud John is a Kentucky lawyer. He represents the best of us and what we strive to be as legal professionals. I was honored to represent Kentucky’s attor neys in Chicago when John received the ABA Medal this summer. What a moment it was to witness this humble man honored by his peers and state that what he was most proud of in a lifetime of achievements was becoming a citizen of the United States of America. John’s journey from Holocaust survivor as a boy to recognition at the high est level of the legal profession is a profound example of America at its best. Most of us will never be involved in high profile cases like John Rosenberg experi enced in his career. But perhaps we can find within ourselves some small amount of the courage he displayed when we face cases and moments of challenge in our own lives and careers. If we do this and stand up for a worthy ideal or act to help others in their search for justice, then we can each send out our own tiny ripple of hope. In this way, we can all continue John’s work of raising the bar throughout Kentucky. That is an aspi ration worth celebrating.

impact the unified Court of Justice has had on the pursuit of justice throughout the Commonwealth over the last 50 years. Lastly, I want to call your attention to one other milestone that deserves significant recognition and celebration. I am pleased to share with you that one of our great Kentucky attorneys, John Rosen berg, has been named the recipient of the American Bar Association (ABA) Medal. The ABA Medal is bestowed upon a lawyer for exceptionally distinguished service to the cause of American jurisprudence. Mr. Rosenberg is the first Kentucky attorney to receive this prestigious award. It is not an overstatement to say that John Rosenberg is an American hero. As a young boy growing up in Germany, John and his family watched the Nazis destroy their synagogue and his father was taken to the Buchenwald concentration camp. Fortu nately, his father was spared and released from that camp and the family was given 30 days to leave Germany. They spent a year in an internment camp in Holland and then came to the United States to start a new life. At a young age, John Rosenberg appreciated what life, liberty, and the pursuit of happi ness meant. John grew up and joined the United States Air Force and then studied law at the Uni versity of North Carolina at Chapel Hill. He witnessed segregation as he grew up in the south and went to work for the U.S.

Department of Justice in the 1960s during the civil rights movement. As a lawyer in the DOJ’s Civil Rights Division, John liti gated significant cases in the south on high profile matters, including working on the prosecution team in the murder case where three voter registration workers were killed in Neshoba County, Mississippi. This case was portrayed in the 1988 movie, Missis sippi Burning. He also successfully tried the first voting rights case in the south after the passage of the 1965 Voting Rights Act. John and his wife, Jean, came to Kentucky in 1970 when he became the director of the Appalachian Research and Defense Fund of Kentucky, known as AppalReD Legal Aid. He served in that role until 2002. His work at AppalReD helped miners who were being impacted by the harmful effects of strip-mining, and it grew to include provid ing legal services for survivors of domestic violence, to veterans, as well as assistance to low-income citizens with housing mat ters, expungements, disaster recovery, and innumerable other matters. Along the way, John was a champion for legal aid programs across the Commonwealth and the nation, always trying to improve the lives of his neighbors. He understands that the rule of law is not an abstract concept. It is the foundational cornerstone of the American system of justice that must be valued and protected. John Rosenberg is now in his mid-nineties and retains his passion for access to justice

Left: Kentucky attorney John Rosenberg accepting the ABA Medal from ABA President Michelle A. Behnke. Right: KBA Executive Director John D. Meyers, ABA Medal Recipient John Rosenberg and KBA President Matthew P. Cook.

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CALL FOR NOMINATIONS The Kentucky Bar Association is accepting nominations for 2027 Distinguished Judge and Lawyer, Donated Legal Services and Bruce K. Davis Bar Service Awards. DISTINGUISHED JUDGE AWARD DISTINGUISHED LAWYER AWARD 2027 DISTINGUISHED SERVICE AWARDS

Awards may be given to any judge or lawyer who has distinguished himself or herself through a contribution of outstanding service to the legal profession. The selection process places special emphasis upon community, civic and/or charitable service, which brings honor to the profession. BRUCE K. DAVIS BAR SERVICE AWARD Many lawyers take time from DONATED LEGAL SERVICES AWARD Nominees for the Donated Legal Services Award must be members in good standing with the KBA and currently involved in pro bono

Nominations must be received by December 31, 2026. If you are aware of a Kentucky judge or lawyer who has provided exceptional service in these areas, please complete a nominating form.

their practices to provide personal, professional and financial support to the KBA. This award expresses the appreciation and respect for such dedicated professional service. All members of the KBA are eligible in any given year except for current officers and members of the Board of Governors.

Please visit the KBA website at https://kybar.org/About-Us/ Distinguished-Service-Awards

work. The selection process places special emphasis on the nature of the legal services contributed and the amount of time involved in the provision of free legal services.

TERMS EXPIRE ON THE KBA BOARD OF GOVERNORS

On June 30 of each year, terms expire for seven (7) of the fourteen (14) Bar Governors on the KBA Board of Governors. SCR 3.080 provides that notice of the expiration of the terms of the Bar Governors shall be carried in the Bench & Bar. SCR 3.080 also provides that a Board member may serve three consecutive two-year terms. Requirements for being nominated to run for the Board of Governors are contained in Section 4 of the KBA By-Laws and the requirements include filing a written petition signed by not less than twenty (20) KBA members in good standing who are residents of the candidate’s Supreme Court District. Board policy provides that “No member of the Board of Governors or Inquiry Commission shall represent an attorney in a discipline matter.” In addition, any member of the Bar who is considering seeking or plans to seek election to the Board of Governors or to a position as an Officer of the KBA will, if elected, be required to sign a limited waiver of confidentiality regarding any private discipline he or she may have received. Any such petition must be received by the KBA Executive Director at the Kentucky Bar Center in Frankfort prior to the close of business on the last business day in October. PLEASE VISIT THE KBA WEBSITE AT WWW.KYBAR.ORG/PETITION TO OBTAIN A PETITION.

THE CURRENT TERMS OF THE FOLLOWING BOARD MEMBERS WILL EXPIRE ON JUNE 30, 2027:

2 ND DISTRICT STEPHANIE MCGEHEE-SHACKLETTE BOWLING GREEN 4 TH DISTRICT SHEILA P. HIESTAND LOUISVILLE 6 TH DISTRICT CATHERINE D. STAVROS FORT MITCHELL

1 ST DISTRICT MATTHEW C. TIERNEY OWENSBORO 3 RD DISTRICT SARAH HAY KNIGHT SOMERSET 5 TH DISTRICT LATOI D. MAYO LEXINGTON

7 TH DISTRICT MIRANDA D. CLICK PIKEVILLE

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Big changes to the Estate and Trust laws of the Commonwealth FEATURE: LEGISLATIVE UPDATE SB 50 BY WAYNE F. WILSON AND EASTON B. DEPP

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G overnor Andy Beshear recently signed Senate Bill 50 (“SB 50”) into law, ushering in one of the most significant updates to Kentucky’s estate and trust laws during the careers of most Kentucky attorneys practicing today. Mostly, effective July 15, 2026, the legis lation expands spousal rights in estates, streamlines probate procedures, autho rizes electronic execution of planning documents, and adopts multiple changes to statutes governing trust creation and administration. Together, these changes modernize the Commonwealth’s trusts and estates legal framework and will materially impact how practitioners advise their cli ents. This article highlights several of SB 50’s most significant provisions and will offer some initial guidance to practitioners on the impact of these changes. ESTATE ADMINISTRATION SB 50 amends KRS 391.01 to update the distribution of assets in intestacy. Property will now pass to the spouse in its entirety if the decedent had no descendants, or if the descendants of the decedent are also descendants of the surviving spouse. Step children are also now included in the list of heirs-at-law, though after most other degrees of kinship have been exhausted. 1 Further, property that passes by beneficiary designation, joint ownership, or transfer on death designation is now included in the calculation of a surviving spouse’s statutory share of the estate. 2 SB 50 also strengthens the claim of the surviving spouse of assets held in certain trusts. Assets held in trust over which the decedent holds (1) a general power of appointment or (2) a power of revocation are now to be included in the calculation of the statutory share. Further, the statutory share calculation now builds in a two-year lookback from the date of death. The look back includes transfers to trusts and third parties when determining the spouse’s statutory share. 3 These changes codify Kentucky’s patchwork of judicial holdings against “fraud on the dower” and create a more equitable standard for the division of a decedent’s assets between a surviving

spouse and other beneficiaries. Doubtless, there have previously been instances when a surviving spouse decided against an action to recover a comprehensive statutory share because of the time, expense and uncertain outcome of such an action. Amendments to KRS 395 have changed much of the form and function of the pro bate process. The changes are particular and detailed, but the broad strokes serve to streamline the appointment process and improve privacy for decedents and bene ficiaries. Inventories and initial “general financial disclosures” are required, but those filings are sealed by default for the privacy of decedents. 4 The deadline for filing a probate inventory has been extended from sixty (60) days to ninety (90) days. The changes have also codified a method for appointment of an executor without a hearing, provided a notarized oath is submitted alongside the filing of the initial paperwork to open the estate. 5 These changes extend to the dispensation of an estate. If a personal representative real izes after the fact that an estate is under the threshold for dispensation, and the estate otherwise qualifies, the personal repre sentative may petition to have the estate closed and an order dispensing approved. 6 This should bring much-needed flexibility for practitioners — estates may be closed as needed even once the probate process has already begun. There are also significant changes to Ken tucky inheritance taxes. Based upon a second set of bills passed during this leg islative session, for deaths occurring after July 1, 2026, the due date for filing and payment of a Kentucky inheritance tax return has been extended from eighteen (18) months to twenty-four (24) months after the date of death. The five percent dis count on payment will be permitted if the payment is received within 14 months. 7 Fur ther, nieces and nephews, including those of the half-blood, are now considered Class A beneficiaries ( i.e. tax exempt). 8

The changes brought to the Kentucky pro bate process should offer privacy benefits to clients and additional flexibility in the administration of estates. However, practi tioners should be aware of the substantial changes contained in the updates related to intestate succession, and to the calculation of a surviving spouse’s statutory share. ESTATE PLANNING SB 50 also brings several critical updates to the world of estate planning. These changes, by and large, offer practitioners several useful tools to integrate into their skillset and increase offerings to clients. SB 50 codifies a version of the Uniform Electronic Wills Act (“EWA”). The EWA provides for the remote online creation, execution, and documentation of Last Wills and Testaments. The requirements for exe cution remain quite rigorous: Two witnesses must contemporaneously witness the sign ing, even if on a video call; these witnesses must be located in the Commonwealth and remain in the Commonwealth for a reason able period of time. 9 Further, the signatures by all parties must be either handwritten, or images of the individual’s handwritten signature. A will that is properly executed online can be made self-proving if it is executed before a Kentucky notary public authorized under KRS 423.455 to perform electronic and/or remote online notarial acts. SB 50 also adopts a version of the Uniform Electronic Planning Documents Acts, which permits electronic execution of other nontestamentary documents includ ing: powers of attorney, trust agreements, and advance directives. 10 Properly followed, these acts will increase access to estate plan ning across the Commonwealth. However, it is not hard to imagine that misuse of these two acts may create opportunities for fraud. SB 50 updates the framework for both the creation and administration of trusts in Kentucky. SB 50 codifies three new areas of trust governance. First, SB 50’s version of Uniform Directed Trust Act outlines how a fiduciary, such as a trust director, may

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FEATURE: LEGISLATIVE UPDATE

of authority by a trustee and also spoke to the role of trust advisors. But questions remained about whether a directed trustee enjoyed any additional liability protection. The UDTA makes clear that a directed trustee will not be held liable for acting in good faith pursuant to the instructions of a trust director. DAPT The Kentucky Qualified Dispositions Act (“QDA”) authorizes the creation of domestic asset protection trusts (DAPTs) in the Com monwealth. Modeled after the Tennessee Investment Services Act of 2007, the QDA brings Kentucky into the interstate arms race to be considered a favorable DAPT jurisdiction. The QDA permits a settlor to create a trust agreement for their own ben efit, but nevertheless prevents the alienation of the beneficial interest, provided certain requirements are met. Kentucky is the 22 nd state to adopt a DAPT statute. By adopting the QDA, Kentucky is on par with neigh bors such as Tennessee, Missouri, Indiana, and Ohio. Kentucky residents can now take advantage of such planning without the need to engage out of state advisors, investment managers and fiduciaries. The QDA requires the settlor to transfer assets to an irrevocable trust and execute an affidavit to accompany the trust agree ment. 13 The affidavit requires the settlor to declare various statements about their financial health and intent with the creation of the trust agreement, to ensure the transfer is not voidable. The trustee may not be the settlor and must be a Kentucky resident or an institution otherwise authorized to act as a trustee in Kentucky. 14 Further, an institu tional trustee must be subject to supervision by a variety of government financial institu tions. The settlor must forego many retained powers over the DAPT. However, the settlor may retain the ability to direct investments, veto distributions, and remove and replace a trustee. 15 The settlor may also retain a lim ited power of appointment over the assets of the trust. The valid creation of a DAPT could have several real impacts on the settlor’s estate. First, the assets contributed to the trust may escape the reach of creditors. There is a two-year lookback period built into the

influence or affect a trust’s administration. Second, the Kentucky Qualified Disposi tions in Trust Act creates the possibility of Kentucky domestic asset protection trusts (“DAPT”), provided all of the necessary pre-requisites are satisfied. Third, SB 50’s version of the Uniform Trust Decanting Act replaces the previous decanting statute and provides new rules regarding a trustee’s abil ity to make distributions in further trust. UDTA SB 50’s version of The Uniform Directed Trust Act (“UDTA”) provides for the adop tion of the Uniform Law Commission’s Act regarding directed trusts and advisors. The UDTA provides statutory guidelines for quasi-fiduciary advisors such as trust protectors, trust advisors, or trust direc tors. These non-trustee fiduciaries receive some power or authority over trust admin istration and may even direct the trustee to take a particular action. Common examples include the ability to modify the trust agree ment, determine the capacity of a trustee, or direct a trustee with respect to diversifi cation of assets. The UDTA further delineates the fiduciary duties owed by trust directors, trustees subject to a trust director, and undirected trustees. Specifically, the UDTA clarifies that trust directors are held to the same fiduciary duties as a trustee if a power held by the trust director qualifies under the UDTA. 11 Those fiduciary duties may be overridden or supplemented by the terms of the trust. On the other hand, trustees that are subject to a trust director – a directed trustee – also had the breadth of their fidu ciary duties affected. Directed trustees are not liable for acts taken at the direction of the trust director. 12 Some exceptions exist – for example, a directed trustee must not comply with any such direction if doing so would constitute willful misconduct. The UDTA brings some much-needed clarity to the realm of quasi-fiduciary roles like the trust director. The adoption of the UDTA should increase the frequency with which directed trusts are utilized in Ken tucky by clarifying the scope and duties, powers, and liabilities of trust directors. Kentucky’s version of the Uniform Trust Code previously provided for delegation

statute to claw back assets by creditors who existed prior to the transfer of the DAPT. Further, a previously existing creditor at the time of the transfer has an additional six months, upon discovery of the trust, to attach assets in the DAPT. Outside of those windows, and provided the Kentucky Uni form Voidable Transactions Act does not apply, assets in the trust agreement shall generally be beyond the reach of creditors. 16 An exception may exist for bankruptcy – the bankruptcy code incorporates a 10-year lookback period for self-settled trusts such as the DAPT. Creditors may be able to bypass the creation of a DAPT to access assets upon a settlor entering bankruptcy proceedings. The QDA also contains exceptions for claims of child support, maintenance, and awards arising from the division of marital property. However, those are exceptions of last resort – the claimant must make rea sonable attempts to satisfy the debt from other sources first. Furthermore, a DAPT could apply to prevent the creation of mar ital property before the union. The settlor could transfer assets to a DAPT and, by doing so, assets inside the trust may not be considered marital property when con templating the division of property upon divorce. Utilizing a DAPT in lieu of a pre nuptial agreement has proven a popular alternative in states which have already Finally, SB 50 included the replacement of the current Kentucky decanting statute under KRS 386.175 with a version of the Uniform Law Commission’s Uniform Trust Decanting Act (“UTDA”). Decanting occurs when a trustee distributes the principal of one trust into another. During a decant ing, minor but substantial modifications may be performed on the second trust. A common example is the creation of a power of appointment. The adoption of the UTDA reforms and substantially updates the rules and requirements for a trustee to decant principal from one trust to a second trust. It also brings Kentucky into alignment with 20 other states that have adopted similar acts. adopted a DAPT statute. UNIFORM TRUST DECANTING ACT

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regarding charitable interests. Furthermore, the Attorney General is now to be included as a qualified beneficiary entitled to notice of the decanting of any trust with a charita ble interest. 22 Charities are often named as last-resort remainder beneficiaries under trust agreements – the implications of such a provision could be wide reaching and substantially limit the ability of trustees to decant for the benefit of other beneficiaries. CONCLUSION Senate Bill 50 adopted a variety of sweeping changes in the worlds of estate administra tion and estate planning. From an overview perspective, the changes to estate admin istration implement confidentiality and streamline various aspects of the process. The adoption of new uniform acts will substantially impact the realm of estate planning. The adoption of the Uniform Electronic Will Act and the Uniform Elec tronic Estate Planning Documents Act will provide practitioners access to electronic execution. The Uniform Directed Trust Act offers practitioner clarity on the roles of trust directors. The Kentucky Quali fied Asset Protection Act provides for the creation of Kentucky domestic asset protec tion trusts and introduces Kentucky to the DAPT arms race. These DAPT trusts may even have planning, creditor, and estate tax advantages. Lastly, the Kentucky Uniform

Trust Decanting Act updates the Common wealth’s decanting statute to align with the Uniform Law Commission. It will critically impact the breadth and scope of decanting in the Commonwealth. Taken as a whole, these changes are an improvement to the estate and trust laws of the Commonwealth. But, all of these changes will require careful study by the Kentucky Bar due to their comprehen sive impact to the legal practice in the Commonwealth.

The adoption of the UTDA changes many aspects of the requirements for decanting. Only the major changes will be identified herein. First, the UTDA does not apply to fully revocable trusts, trusts solely for charitable purposes, or trusts that expressly prohibit decanting. 17 Otherwise, the UTDA applies quite broadly to any trust agreement in which the trustee holds a discretionary power to distribute principal. This is a change from the previous KRS 386 standard, which required the authority to distribute principal or income . 18 One major exception under the Act is that a trustee may decant to a trust that would qualify as a special needs trust, even if the trustee may not have the required discretionary authority over the principal of the first trust. 19 Under the UTDA, the distributive discre tion that a trustee retains may determine the degree and manner in which the trustee may decant. If a trustee may only distribute assets under the first trust by an “ascertain able standard” or a “reasonably definite standard”, as the statute defines the terms, then the trustee retains “limited distribu tive discretion” and may only decant to the second trust upon the substantially same terms as the first trust. 20 If, however, the trustee’s discretion is not limited by either of the aforementioned standards, then the trustee has “expanded distributive discre tion” and may decant to the second trust on a much greater scope. For example, a trustee with expanded distributive discretion may omit beneficiaries of the first trust who do not have a vested or noncontingent interest. A trustee with expanded distributive discre tion may also omit powers of appointment in the second trust, provided the power of appointment is not presently exercisable. 21 Accordingly, the trustee may also create or modify the powers of appointment, with some statutory restrictions. Another major change of note is the treat ment of charitable interests under the UTDA. Unlike the current law under KRS 386, the UTDA as adopted places several restrictions on a trustee’s ability to decant when a charitable interest exists under the first trust. A trustee may not decant a trust in such a way that: (1) diminishes a charita ble interest; (2) alters a charitable purpose, (3) or alters any condition or restriction

ENDNOTES 1

KRS 391.010 KRS 392.020 KRS 392.020 KRS 395.015 KRS 395.470 KRS 140.160 KRS 140.070

2 3 4 5 6 7 8 9

KRS 395.015; KRS 395.250

KRS 394.706 10 KRS 394.722 11 KRS 386B.12-070 12 KRS 386B.12-080

13 KRS 386.603 14 KRS 386.611 15 KRS 386.617 16 KRS 386.605

17 KRS 386B.13-020 18 KRS 386B.13-010 19 KRS 386B.13-210 20 KRS 386B.13-110 21 KRS 386B.13-100 22 KRS 386B.13-130

ABOUT THE AUTHORS WAYNE F. WILSON is a partner at Dinsmore & Shohl LLP where he co-chairs the firm’s tax benefits and wealth planning practice group. He received his J.D. from the Brandeis School of Law at the University of Louisville and his B.A. from Transylvania University. Wilson is on the faculty of the Bondurant / Bagby Estate Planning Institute at the University of Kentucky and is a Fellow of the American College of Trust and Estates Counsel.

EASTON B. DEPP is an associate at Dinsmore & Shohl LLP specializing in estate planning and trust administration. He received his J.D. from the University of Notre Dame and his B.A. from the University of Louisville. Licensed in both Kentucky and Indiana, he is an active member of the Young Lawyers Division of the Kentucky Bar Association.

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BY MARK F. SOMMER, TAYLOR E. ECLEBERRY AND JASMINE M. COWEN 1 KENTUCKY’S NEW PREDICTION MARKETS TAX CARE TO PREDICT?

I n the recently concluded 2026 Regular Session of Kentucky’s General Assembly, there was significant activity concern ing the prediction market industry, all with potential serious economic impact. Spe cifically, House Bills 757, 869, and 904 all addressed prediction market contracts in one way or another. Via essentially a double-barrel blast against prediction markets, Kentucky has enacted what is, at its end, a 14.25% transaction al-based excise tax on prediction market

BACKGROUND ON THE ECONOMIC IMPACT OF SPORTS BETTING The Supreme Court’s 2018 ruling in Murphy v. National Collegiate Athletic Association effectively allowed states to legalize sports betting and nullified a 1992 federal law — the Professional and Amateur Sports Protection Act (PASPA). 3 The Court held that PASPA violated the Tenth Amend ment’s anticommandeering doctrine. Instead of passing a federal law that bans

contracts. But in doing so, it has not “legal ized” nor “regulated” this space. Or has it? Kentucky now finds itself at the center of the battle over prediction markets in the United States. Kentucky state officials have pursued aggressive enforcement actions against prediction market platforms, and the Commodity Futures Trading Commis sion (CFTC) has brought its own federal litigation aimed at curbing the state’s reach. 2

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gambling, the PASPA singled out states by prohibiting states from authorizing gam bling on sports. Since the Court’s ruling in Murphy , 39 states and Washington D.C. have legalized some form of sports betting, and the sports betting industry has boomed across the country. In 2018, American sports bettors collectively wagered $6.61 billion. In 2025, Americans wagered $164 billion — a dra matic 2,381% increase. 4 Kentucky legalized sports betting in March 2023 when Governor Andy Beshear signed House Bill 551 into law, making Kentucky the 37 th state to permit regulated sports wagering. Kentucky has deep roots in wagering culture stretching back nearly 150 years, anchored by the Kentucky Derby at Churchill Downs. First run in 1875, the Kentucky Derby is the oldest continuously held major sporting event in the United States. Formal betting on early Derby Days involved auction pools, pari-mutuel wager ing, and bookmaking. In 2026, wagering from all sources on the Derby Day racing card totaled $340 million. 5 However, with the widespread popularity of mobile bet ting apps, Kentuckians can now wager far beyond “the most exciting two minutes in sports.” 6 PREDICTION MARKETS ARE NOT SPORTS BETTING MARKETS Prediction contract markets are not sports betting markets. Typically, prediction market platforms operate by allowing users to buy and sell event contracts. An event contract allows people to speculate on the outcome of a specific event and pays its face value if the event happens and $0 if it does not. For example, a contract priced at $0.60 suggests a 60% probability, as perceived by those trading, of an event occurring before the contract’s expiration. Additionally, option contracts allow a user to trade in and out of positions, unlike typical sports bets. A user could, for example, put in $50 that President Trump will sanction a certain country, and sell the position for a profit if current prediction market prices are better. In this way, option contracts operate simi larly to certain stock trades.

While some sports-related prediction contracts are within the activity on these platforms, users can also invest in a variety of political and cultural events, including predicting the winner of the 2026 Nobel Peace Prize, the winner of Love Island USA Season Eight, or who Spotify’s Top Global Artist 2026 will be. Because prediction markets are framed, cor rectly, as federally regulated event contracts and not state-regulated gambling, predic tion markets are regulated by the CFTC as a Designated Contract Market. Kentucky has spent decades building a regulated gambling model around horse racing, which holds great economic and cultural significance for the Common wealth. While traditional horse wagering and sports betting are legal under Kentucky state law and regulated by the Kentucky Horse Racing and Gaming Commission (KHRGC), because prediction markets reflect probability and allow traders to enter and exit positions before an event concludes, the prediction market industry asserts that the model more closely resem bles traditional financial exchanges. Others argue that because some of the underlying assets of many prediction market contracts are sporting events, they are subject to reg ulation by the gaming authorities. Regardless, the Commonwealth will need to sort out its approach quickly. As sports betting has grown in popularity, so has its revenue. While the Commonwealth initially anticipated online sports wagering excise taxes would create $23 million in annual revenue, tax revenue has doubled those ini tial estimates, with Kentucky collecting over $46 million in 2025. 7 A review of the 2026 legislation suggests that Kentucky lawmakers appear to have viewed prediction markets as a fast-emerg ing substitute or competitor for regulated sports wagering, horse racing wagering, and fantasy contests. The legislative record, such that it is, reflects concern, appropriately, that Kentucky may be limited in directly regu lating prediction markets because of federal law, but that the state can still regulate Ken tucky licensees, impose taxes, and prevent state-licensed gaming participants from affiliating with prediction market reforms.

By passing House Bills 757, 869, and 904, Kentucky’s General Assembly effectively targets prediction markets as a new form of event-based wagering that could compete with, or route around, Kentucky’s regulated sports betting, horse racing, fantasy contest, and charitable gaming systems. KENTUCKY HOUSE BILL 757: THE PREDICTION MARKET OPERATOR EXCISE TAX The tax created by HB 757 is, on its face, extremely broad. The bill set the predic tion market operator excise tax at 14.25% of “transaction fees.” It is written to capture any prediction con tract purchased within the state border of Kentucky, but , as written, it also subjects to tax any prediction contract involving a Kentucky resident occurring anywhere — no border limitation language was enacted addressing transactions involving Kentucky residents. This provision alone raises significant jurisdictional and constitutional issues, particularly under the dormant Commerce Clause, given that prediction contracts purchased by, for example, a Kentucky res ident while traveling in California would be subject to this tax as well. So, not only is Kentucky the first state in the country 8 to tax prediction market contracts, but the tax as presently written is virtually unprec edented in its grasp concerning out-of-state transactions involving a Kentucky resi dent, raising substantial questions about whether it impermissibly burdens interstate commerce. The best indication that the Legislature sees the different industries as one is shown by rate. The 14.25% tax rate on prediction market contracts is equivalent to that which is levied upon sports betting transactions in Kentucky; however, the “tax base” is somewhat different in specificity. The tax is imposed on the “transaction fees” of a “Prediction Market Operator,” and is not subject to any further deduction nor offset. “Transaction fee” is both the fee charges to complete a contract transaction and the amount paid by a consumer to purchase a

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FEATURE: LEGISLATIVE UPDATE

contract. And, by creating a monthly tax compliance structure akin to sales and use tax, HB 757 also seeks to impose personal liability on the market platform operator, which is defined as a “Prediction Market Operator.” Excepted from being subjected to the 14.25% transaction tax are any contract of sale of a commodity or an option thereon, including any swap or derivative transac tion based on agricultural commodities, with specific reference made to the Federal

Commodity Exchange Act. Further, note that a prediction market may include a board of trade designated as a contract market by the CFTC. Personal liability, like sales and use taxes and other excise taxes imposed by Kentucky, is imposed and that liability specifically attaches to corporate officer-type positions, with such liability being personal and indi vidual liability, both joint and several, for the transaction tax. However, there is no per sonal or individual liability for the tax if the

involved person had “no authority to col lect, truthfully account for, or pay over any tax at any time the taxes imposed become or became due.” 9 Also, note the use of the word “collect,” suggesting that the Kentucky Leg islature believes that a Prediction Market Operator may collect such taxes from the parties to the contract, in the manner of a “trust fund” tax type structure, assuming the contract is subject to tax by Kentucky to begin with. That is a wholly different concern. KENTUCKY HOUSE BILL 904: THE GAMING BILL Another large piece of legislation which worked through the General Assembly involved prediction markets and other independent gaming-related changes. HB 904, dubbed the “Wagering Consumer Protection Act,” in sum bars any business regulated by the Kentucky Horse Racing and Gaming Corporation from engaging, directly or indirectly through other entities, in prediction market-related transactions. HB 904 also changed the minimum age for legal sports betting in Kentucky from 18 years to 21 years of age and banned proposition bets against individual college athletes competing for Kentucky teams. For example, a sportsbook could not offer a bet like “Will XXX, star player for the Kentucky Wildcats, score over 20 points tonight?” HB 904 aimed to bring multiple forms of gaming under a more unified regulatory system overseen by the KHRGC. Predic tion markets are federally enforced and HB 904 purports to act as a firewall to preserve authority for the KHRGC or the Kentucky Department of Revenue to regulate predic tion market conduct or activity in Kentucky in accordance with applicable federal law. However, as laws and attitudes surrounding prediction markets have developed rapidly since the Murphy decision and America’s newfound love for prediction market web sites and apps, this language left room for litigation regarding the constitutionality of HB 904. KENTUCKY HOUSE BILL 869: THE TAX CLEANUP BILL As is not uncommon in Kentucky legisla tion, there was some drama associated with HB 757. It passed overwhelmingly in the

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Kentucky House of Representatives and Senate, but Governor Andy Beshear vetoed several of its provisions. When the General Assembly returned after a break but prior to adjourning for this Session, the HB 757 veto was overridden by the House and the Senate, again, overwhelmingly. HB 757 carries an effective date of January 1, 2027. HB 757, as initially passed, contained the following language: “It is the purpose and intent of the General Assembly to levy taxes on persons engaged in the operations of a Prediction Market. It is not the intent of the General Assembly to legalize these activities.” But when the General Assem bly returned after its short break and again before it adjourned, it enacted HB 869, a sort of tax cleanup bill with a multitude of various tax-related provisions addressed therein. Kentucky’s prediction market tax was amended by HB 869, and the above quoted text as to purpose and intent was specifically stricken by the General Assem bly in HB 869. No public dialogue as to the reason has been located.

HB 869 revised the “firewall” approach by amending HB 904 to address contracts with entities offering sports events contracts or sports prediction markets and authorized administrative action by the KHRGC. Effec tively, the bill tightened enforcement and focused the restriction on sports-related prediction market contracts. PREDICTION MARKETS IN KENTUCKY MOVING FORWARD With roughly four months before its Jan uary 1, 2027, effective date, it will be quite interesting to see how the industry and other state and federal regulators react to this new frontier of taxation. Litigation has commenced, with lawsuits advancing var ious claims already filed by the industry, the Kentucky Attorney General, and the CFTC. A growing number of states have begun acting related to prediction mar kets, including Illinois, Tennessee, North Carolina, Michigan, Ohio, and New Jersey. Kentucky is at the forefront.

ABOUT THE AUTHORS

MARK F. SOMMER , ESQ. is a partner and the chair of the tax, benefits & estates

practice group at FBT Gibbons LLP. With nearly 40 years of experience, his practice focuses on state and local taxation, federal tax matters, tax controversy and litigation, and economic development incentives. He has represented more than 120 For tune 500 companies and has served as counsel in over 1,000 tax controversies across numerous jurisdictions. Sommer is a Fellow of the American College of Tax Counsel, a past chair of the ABA Tax Section’s State and Local Tax Committee, and has been recognized by Best Lawyers in America, Super Lawyers, and State Tax Notes for his contributions to the field. He is a frequent author and speaker on state and local tax issues.

ENDNOTES 1 Jasmine M. Cowen contributed to this article as a summer associate at FBT Gibbons LLP and is a stu dent at William & Mary Law School. Ms. Cowen is not a licensed attorney. 2 Commonwealth v. KalshiEX LLC , et al. , No. 26-CI-00689 (Ky. Cir. Ct. June 17, 2026); Commonwealth v. QCX LLC, et al. , No. 26-CI-00696 (Ky. Cir. Ct. June 17, 2026); Coalition for Fair Markets v. Com monwealth, et al. , No. 26-CI-00667 (Ky. Cir. Ct. June 12, 2026). 3 Murphy v. Nat’l Collegiate Athletic Ass’n , 584 U.S. 453, 454 (2018). 4 Aleksandra Dimitrova, How Much Money Do Americans Spend on Sports Betting, PlayersTime (Feb. 28, 2026) https://www.playerstime.com/reports/how-much-money-do-americans-spend-on sports-betting/. 5 Alexis Cubit, Kentucky Derby 2026 Payouts as Churchill Downs Sees Drops in Wagering, Courier Jour nal (May 3, 2026), https://www.courier-journal.com/story/sports/horses/kentucky-derby/2026/05/03/ golden-tempo-kentucky-derby-betting-payouts-run-for-the-roses-odds-churchill-downs-gambling records/89106648007/. 6 See Racing at Churchill Downs, Churchill Downs, https://www.churchilldowns.com/racing/ (last visit ed Aug. 14, 2026). 7 Complaint ¶ 39–40, Commonwealth of Kentucky v. QCX LLC, et al. , 26-CI-00696 (Ky. Cir. Ct. June 17, 2026); Sports Betting Tax Revenue Surges 382% as States Expand Legal Markets, Courier Journal (Dec. 10, 2025 at 02:23 PM EST), https://www.wkyt.com/2025/12/10/sports-betting-tax-revenue-surges-382 states-expand-legal-markets/; Eric Ramsey, US Sports Betting Revenue & Handle, Legal Sports Report (Mar. 27, 2026), https://www.legalsportsreport.com/sports-betting-states/revenue/. 8 Since Kentucky’s Tax was enacted, the states of North Carolina and Illinois have followed in taxing these contracts. 9 Ky. Rev. Stat. § 138.507(6).

TAYLOR E. ECLE BERRY is an associate

in the tax, benefits & estates practice group at FBT Gibbons LLP. Before joining the firm, she served as a law clerk in the U.S. Dis trict Court for the Eastern District of Kentucky. Ecleberry

earned her J.D., summa cum laude , from the University of Kentucky J. David Rosen berg College of Law, where she served as managing editor of the Kentucky Law Journal, and received her B.A. in politics from Washington & Lee University.

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