Kentucky's New Inheritance Law and Your Business

The short version: Kentucky Senate Bill 50 rewrites what a surviving spouse inherits when there is no will, and it quietly expands the pool of assets a spouse can reach, including assets you may have already moved into a trust or retitled, which makes a well drafted buy-sell agreement more important, not less.

Kentucky Senate Bill 50 took effect on July 15, 2026, and it is the most significant overhaul of the Commonwealth’s inheritance and probate laws in a generation. Most of the early commentary has focused on what the new Kentucky inheritance law means for individuals and families planning their estates. For owners of family-owned and closely held businesses, it raises a narrower and more urgent question: what happens to your ownership stake if you die without a succession plan or a buy-sell agreement in place?

The answer changed on July 15. It did not change in the simple direction most of the summaries suggest, and the part that matters most to business owners is the part nobody is talking about.

What actually changed for a surviving spouse

Under the old KRS 391.010, a surviving spouse sat surprisingly low in the order of descent for real estate: behind the decedent’s children, behind their parents, and even behind their brothers and sisters. The rewritten statute puts the spouse first. How much the spouse takes now depends on the shape of the family:

No descendants at all: the spouse takes everything.
Descendants, and all of them are also the spouse’s: the spouse takes everything.
A descendant who is not the spouse’s: the spouse takes half.
All the descendants are shared, but the spouse has a child who is not the decedent’s: the spouse takes half.

Read that list carefully, because the intuition most people bring to it is wrong. The spouse takes everything in the intact family case, where there are no children or where all the children belong to both spouses. In the blended family case, where either spouse has a child from a prior relationship, the statute does the opposite of what you might expect: it cuts the spouse back to one-half and preserves a share for the children.

Stepchildren were also added to the order of descent, which several summaries have flagged. In practice this will almost never matter: stepchildren inherit only if there is no spouse, no descendants, no parents, no siblings, no grandparents, and no aunts or uncles. It is the bottom of a long list.

The change that should worry business owners

Here is the provision that did not make the headlines. SB 50 kept dower and curtesy in KRS 392.020, including the surviving spouse’s absolute estate in one-half of the decedent’s “surplus” personalty. What it changed is the definition of surplus, and it changed it dramatically. Surplus now includes:

Property payable under a beneficiary designation, a transfer-on-death designation, or a payable-on-death designation, including retirement accounts.
Property jointly owned with right of survivorship.
Property held by or payable to a trust over which the decedent held a power of revocation, and property over which the decedent held a general power of appointment.
Property of any kind the decedent transferred within two years before death.

For a business owner, that is the whole ballgame. Many succession plans are built precisely on these tools: the interest sits in a revocable trust, or it passes by a transfer-on-death designation, or it was gifted to a child last year. Those moves used to sit outside the spouse’s statutory share. Under the new statute they are pulled back in and counted. The statute goes further and gives the surviving spouse a direct cause of action against the people who received that property, to the extent it is needed to satisfy the dower or curtesy claim.

This is not only a problem for people who die without a will. A surviving spouse who is unhappy with what a will leaves them can renounce it, generally within six months after the will is admitted to probate, and take the KRS 392.020 interest instead. Because that interest now reaches the assets listed above, having a will does not by itself put a business interest beyond a spouse’s reach.

In other words: SB 50 makes it considerably harder to route a business interest around a spouse, whether or not that was ever your intention. If your plan quietly assumed otherwise, it is now built on a rule that no longer exists.

How the KRS 391.010 share and the KRS 392.020 dower interest stack in any given estate is technical, and it depends on the mix of real estate, personal property, and non-probate assets involved. That is a conversation to have with counsel about your actual holdings, not a calculation to run from a blog post.

Why this matters for family and closely held businesses

Intestacy law does not know or care what you and your business partners intended. It applies a fixed formula, and that formula just changed. A few scenarios worth thinking through:

Two-owner companies with no buy-sell agreement. If one owner dies, the surviving owner can find themselves in business with the deceased owner’s spouse, who holds real ownership rights and no obligation to sell, even though the company was built on a working relationship between the original two people.
Businesses co-owned with siblings. If you own a piece of the family company alongside your brothers and sisters and you die without a will, your spouse now stands ahead of your siblings in the order of descent. They may end up owning your interest alongside siblings they have never worked with.
Blended families. The one-half rules above land hardest here, and they cut both ways. The interest can end up divided between a surviving spouse and children from a prior marriage, which is a recipe for deadlock in a company that needs someone to make decisions on Monday morning.
Plans built on trusts and beneficiary designations. See the section above. The tools many owners have already used may no longer do what they were chosen to do.

None of this is a problem if you have a well drafted succession plan or buy-sell agreement that controls what happens to your interest on death, disability, or retirement. It is a problem only if you are relying on Kentucky’s default rules to sort it out for you, and those default rules now look different than they did.

We have written before about how badly this goes when the documents are silent. See When Business Partners Become Adversaries: What Every Kentucky LLC Member Should Know and The Importance of LLC Operating Agreements.

Faster and more private probate

Not all of SB 50 is a warning. Some of it is a genuine improvement, and one piece is a real benefit to business owners.

A personal representative can now be appointed without a court appearance where the proper filings are made, and the automatic bond requirement is gone unless a court or statute requires one. A personal representative now has 90 days to file the estate inventory. Most importantly, that inventory is now confidential and placed under seal, and the new financial disclosure statement filed to open an estate is sealed as well. Under the old practice, an estate filing could put a private company’s assets on the public record for any competitor, customer, or curious neighbor to read. SB 50 closes that window.

Electronic wills are now recognized

SB 50 enacts the Uniform Electronic Wills Act at KRS 394.700 to 394.715. An electronic will must be readable as text when it is signed and signed by the testator, and it must be witnessed by at least two people who may be in the testator’s “electronic presence,” meaning real-time video rather than the same room.

The requirements are stricter than “sign it on your phone.” Each witness must be both a resident of Kentucky and physically located in Kentucky at the time of signing, and each must sign within a reasonable time after witnessing. A separate part of the bill extends similar electronic execution rules to powers of attorney and other non-will estate planning documents. The option is real, and it makes getting a basic plan in place easier than it has ever been.

What business owners should review now

SB 50’s effective date is a natural prompt to pull out your governing documents and check a few things:

Do you have a buy-sell or succession agreement at all? If not, this is the highest-priority item. A buy-sell agreement can define who has the right, or the obligation, to purchase a deceased owner’s interest, at what price, and on what terms, whatever the intestacy statute says.
If you have one, when was it drafted, and what did it assume? Many older agreements were written against assumptions about the spousal share that no longer hold.
Does your operating agreement or shareholder agreement restrict transfers? Transfer restrictions can keep an interest from landing with someone outside the business without the other owners’ consent.
Does your plan rely on a revocable trust, beneficiary designations, or recent gifts? Those are exactly the assets the new definition of surplus now reaches. This one is new, and it is the reason to review even a plan you thought was finished.
Is your personal estate plan coordinated with your business succession plan? A will or trust that is silent on the business, or that contradicts a buy-sell agreement, produces precisely the dispute you were trying to avoid.

How we can help

Commonwealth Counsel Group works at the intersection these changes sit on. We handle estate and succession planning and we handle business formation and disputes, which means we can read a will and an operating agreement in the same conversation and tell you whether they agree with each other. Often they do not, and the owner is the last to find out.

Would your succession plan survive the new law?

If you own part of a Kentucky business, three questions are worth asking this month: who inherits your interest, who runs the company, and do your documents actually say the same thing? If you are not sure, contact us or call (502) 805-2303, and we will walk through it with you. The best time to put a succession plan in place is before anyone needs it.