On certification of a question from the U.S. Court of Appeals for the Tenth Circuit, the Kansas Supreme Court finds that a bankruptcy debtor may claim a homestead exception even when the real property has been transferred to a living trust prior to bankruptcy. Redmond v. Kester (Kan., No. 97,627, June 8, 2007).
Donald and Charlotte Kester transferred the ownership of their home to a revocable trust in which Mrs. Kester was trustee and both parties were beneficiaries.
After filing for Chapter 7 bankruptcy in 2002, the Kesters claimed the house as exempt property pursuant to the homestead exemption. The federal bankruptcy court denied the bankruptcy trustee’s motion to compel the Kesters to turn over the house, holding that the Kesters were entitled to a homestead exemption. The bankruptcy trustee appealed to the U.S. Court of Appeals for the Tenth Circuit. The Tenth Circuit submitted the certified question to the Kansas Supreme Court.
The Kansas Supreme Court finds that a bankruptcy debtor may claim the homestead exemption for real property placed in a revocable living trust prior to bankruptcy. According to the court, because the Kesters still had an equity interest in the real estate and they lived in the house, they could claim a homestead exemption.
