KRS § 397.1007 — KY Code / Title XXXIV / Chapter 397 / Section 397.1007
397.1007 Protection of payors, bona fide purchases, and other third parties -- Personal liability of recipient
Status: in_force

397.1007 Protection of payors, bona fide purchases, and other third parties --

Personal liability of recipient.

(1) (a) A payor or other third party shall not be liable for having made a payment or

transferred an item of property or any other benefit to a beneficiary designated

in a governing instrument who, under this chapter, is not entitled to the

payment or item of property, or for having taken any other action in good faith

reliance on the beneficiary's apparent entitlement under the terms of the

governing instrument, before the payor or other third party received written

notice of a claimed lack of entitlement under this chapter. A payor or other

third party shall be liable for a payment made or other action taken after the

payor or other third party received written notice of a claimed lack of

entitlement under this chapter.

(b) Written notice of a claimed lack of entitlement under paragraph (a) of this

subsection shall be mailed to the payor's or other third party's main office or

home by registered or certified mail, return receipt requested, or served upon

the payor or other third party in the same manner as a summons in a civil

action. Upon receipt of written notice of a claimed lack of entitlement under

this chapter, a payor or other third party shall pay any amount owed, or

transfer or deposit any item of property held by it, to or with the court having

jurisdiction of the probate proceedings related to the decedent's estate, or if no

proceedings have been commenced, to or with the court having jurisdiction of

probate proceedings relating to the decedent's estate located in the county of

the decedent's residence. The court shall hold the funds or item of property

and, upon its determination under this chapter, shall order disbursement in

accordance with the determination. Payments, transfers, or deposits made to or

with the court shall discharge the payor or other third party from all claims for

the value of amounts paid to or items of property transferred to or deposited

with the court.

(2) A person who purchases property for value and without notice, or who receives a

payment or other item of property in partial or full satisfaction of a legally

enforceable obligation, shall not be obligated under this chapter to return the

payment, item of property, or benefit and shall not be liable under this chapter for

the amount of the payment or the value of the item of property or benefit. But a

person who, not for value, receives a payment, item of property, or any other benefit

to which the person is not entitled under this chapter shall be obligated to return the

payment, item of property, or benefit or shall be personally liable for the amount of

the payment of the value of the item of property or benefit, to the person who is

entitled to it under this chapter.

(3) If this chapter, or any part of this chapter, is preempted by federal law with respect

to a payment, an item of property, or any other benefit covered by this chapter, a

person who, not for value, receives the payment, item of property, or any other

benefit to which the person is not entitled under this chapter shall be obligated to

return the payment, item of property, or benefit or shall be personally liable for the

amount of the payment or the value of the item of property or benefit, to the person

who would have been entitled to it were this chapter, or part of this chapter, not

preempted.