diff --git a/include/xrpl/protocol/detail/transactions.macro b/include/xrpl/protocol/detail/transactions.macro
index 73e5173876b..ce491b4586f 100644
--- a/include/xrpl/protocol/detail/transactions.macro
+++ b/include/xrpl/protocol/detail/transactions.macro
@@ -1084,7 +1084,7 @@ TRANSACTION(ttLOAN_PAY, 84, LoanPay,
 TRANSACTION(ttSPONSORSHIP_TRANSFER, 85, SponsorshipTransfer,
     Delegation::Delegable,
     featureSponsor,
-    NoPriv,
+    MayModifyVault,
     ({
     {sfObjectID, SoeOptional},
     {sfSponsee, SoeOptional},
diff --git a/include/xrpl/protocol_autogen/transactions/SponsorshipTransfer.h b/include/xrpl/protocol_autogen/transactions/SponsorshipTransfer.h
index 8ac43071ee8..ff11a957a7b 100644
--- a/include/xrpl/protocol_autogen/transactions/SponsorshipTransfer.h
+++ b/include/xrpl/protocol_autogen/transactions/SponsorshipTransfer.h
@@ -21,7 +21,7 @@ class SponsorshipTransferBuilder;
  * Type: ttSPONSORSHIP_TRANSFER (85)
  * Delegable: Delegation::Delegable
  * Amendment: featureSponsor
- * Privileges: NoPriv
+ * Privileges: MayModifyVault
  *
  * Immutable wrapper around STTx providing type-safe field access.
  * Use SponsorshipTransferBuilder to construct new transactions.
diff --git a/src/libxrpl/tx/invariants/VaultInvariant.cpp b/src/libxrpl/tx/invariants/VaultInvariant.cpp
index 80b8f36bd92..ad29617f6b0 100644
--- a/src/libxrpl/tx/invariants/VaultInvariant.cpp
+++ b/src/libxrpl/tx/invariants/VaultInvariant.cpp
@@ -1048,6 +1048,10 @@ ValidVault::finalize(
                 // TBD
                 return true;
             }
+            case ttSPONSORSHIP_TRANSFER: {
+                // SponsorshipTransfer may update a vault's sfSponsor
+                return true;
+            }
 
             default:
                 // LCOV_EXCL_START
diff --git a/src/libxrpl/tx/transactors/Sponsor/SponsorshipTransfer.cpp b/src/libxrpl/tx/transactors/Sponsor/SponsorshipTransfer.cpp
index 24eb54e632a..fd41ee892e7 100644
--- a/src/libxrpl/tx/transactors/Sponsor/SponsorshipTransfer.cpp
+++ b/src/libxrpl/tx/transactors/Sponsor/SponsorshipTransfer.cpp
@@ -205,6 +205,9 @@ getLedgerEntryOwnerCount(T const& sle)
         case ltORACLE: {
             return OracleSet::calculateOracleReserve(sle->getFieldArray(sfPriceDataSeries).size());
         }
+        // Vaults require 2 owner counts (the vault and a pseudo-account)
+        case ltVAULT:
+            return 2;
         default:
             return 1;
     }
diff --git a/src/libxrpl/tx/transactors/payment/Payment.cpp b/src/libxrpl/tx/transactors/payment/Payment.cpp
index 08632158ac2..db176611e85 100644
--- a/src/libxrpl/tx/transactors/payment/Payment.cpp
+++ b/src/libxrpl/tx/transactors/payment/Payment.cpp
@@ -132,6 +132,9 @@ Payment::preflight(PreflightContext const& ctx)
         if (tx.isFlag(tfNoRippleDirect) || tx.isFlag(tfPartialPayment) || tx.isFlag(tfLimitQuality))
             return temINVALID_FLAG;
 
+        if (tx.isFieldPresent(sfSendMax) || tx.isFieldPresent(sfPaths))
+            return temINVALID;
+
         if (!dstAmount.native())
             return temBAD_AMOUNT;
     }
diff --git a/src/test/app/Sponsor_test.cpp b/src/test/app/Sponsor_test.cpp
index d3f94c2ccb6..50bf9f4c92d 100644
--- a/src/test/app/Sponsor_test.cpp
+++ b/src/test/app/Sponsor_test.cpp
@@ -20,8 +20,10 @@
 #include <test/jtx/multisign.h>
 #include <test/jtx/noop.h>
 #include <test/jtx/offer.h>
+#include <test/jtx/paths.h>
 #include <test/jtx/pay.h>
 #include <test/jtx/permissioned_domains.h>
+#include <test/jtx/sendmax.h>
 #include <test/jtx/seq.h>
 #include <test/jtx/sig.h>
 #include <test/jtx/sponsor.h>
@@ -1848,6 +1850,20 @@ class Sponsor_test : public beast::unit_test::Suite
         env(pay(alice, bob, usd(100)), Txflags(tfSponsorCreatedAccount), Ter(temBAD_AMOUNT));
         env.close();
 
+        // Sponsored account creation is reserve sponsorship and is only supported for direct XRP
+        // payments.
+        env(pay(alice, bob, drops(1)),
+            Txflags(tfSponsorCreatedAccount),
+            Sendmax(usd(2)),
+            Ter(temINVALID));
+        env.close();
+
+        env(pay(alice, bob, drops(1)),
+            Txflags(tfSponsorCreatedAccount),
+            Path(~XRP),
+            Ter(temINVALID));
+        env.close();
+
         // Account is not sponsored by normal Sponsor specification
         {
             env(pay(alice, bob, drops(baseAccountReserve(*env.current(), 0))),
@@ -4985,6 +5001,61 @@ class Sponsor_test : public beast::unit_test::Suite
             BEAST_EXPECT(sponsoredOwnerCount(env, alice) == 0);
             BEAST_EXPECT(sponsoringOwnerCount(env, sponsor) == 0);
         }
+        // SponsorshipTransfer
+        {
+            Env env{*this, testableAmendments()};
+            env.fund(XRP(1000000), alice, bob, gw, sponsor);
+            env.close();
+
+            Vault const vault{env};
+            auto const [tx, vaultKeylet] = vault.create({.owner = alice, .asset = asset});
+            env(tx);
+            env.close();
+
+            // Alice owns the vault, pseudo account and MPToken
+            BEAST_EXPECT(ownerCount(env, alice) == 3);
+            BEAST_EXPECT(sponsoredOwnerCount(env, alice) == 0);
+            BEAST_EXPECT(sponsoringOwnerCount(env, sponsor) == 0);
+
+            if (cosigning)
+            {
+                // Alice lets sponsor to sponsor her Vault
+                env(sponsor::transfer(alice, tfSponsorshipCreate, vaultKeylet.key),
+                    sponsor::As(sponsor, spfSponsorReserve),
+                    Sig(sfSponsorSignature, sponsor));
+                env.close();
+            }
+            else
+            {
+                // Create sponsorship with reserve count being 2 (for vault and pseudo account)
+                env(sponsor::set_reserve(sponsor, 0, 2), sponsor::SponseeAcc(alice));
+                env.close();
+                env(sponsor::transfer(alice, tfSponsorshipCreate, vaultKeylet.key),
+                    sponsor::As(sponsor, spfSponsorReserve));
+                env.close();
+
+                auto const sponsorshipSle = env.le(keylet::sponsor(sponsor, alice));
+                if (!BEAST_EXPECT(sponsorshipSle))
+                    return;
+                BEAST_EXPECT(sponsorshipSle->getFieldU32(sfReserveCount) == 0);
+            }
+
+            BEAST_EXPECT(env.le(vaultKeylet)->getAccountID(sfSponsor) == sponsor.id());
+            BEAST_EXPECT(ownerCount(env, alice) == 3);
+            BEAST_EXPECT(sponsoredOwnerCount(env, alice) == 2);
+            // Vault counts for 2 reserves, vault and the pseudo account
+            BEAST_EXPECT(sponsoringOwnerCount(env, sponsor) == 2);
+
+            // End sponsorship
+            env(sponsor::transfer(alice, tfSponsorshipEnd, vaultKeylet.key));
+            env.close();
+
+            BEAST_EXPECT(!env.le(vaultKeylet)->isFieldPresent(sfSponsor));
+            BEAST_EXPECT(ownerCount(env, alice) == 3);
+            // Sponsorship ended and the sponsored owner count should be 0.
+            BEAST_EXPECT(sponsoredOwnerCount(env, alice) == 0);
+            BEAST_EXPECT(sponsoringOwnerCount(env, sponsor) == 0);
+        }
     }
 
     void