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.