On certification of question of law from the United States Court of Appeals for the Tenth Circuit.
1. Because the manner in which the homestead exemption may be alienated is specifically enumerated in our state constitution, courts must liberally construe the constitutional provision without restricting its application.
2. The homestead exemption in K.S.A. 60-2301 is derived from the Article 15, Section 9 of the Kansas Constitution. Defining the term "owner" in K.S.A. 60-2301 broadly to include occupants of real estate who hold any type of interest, including an equitable interest, is consistent with the public policy of protecting Kansas citizens from the hardships associated with losing the family home.
3. Debtors may claim the homestead exemption based on any interest in real estate, whether legal or equitable, as long as the debtors have not abandoned their occupation of the real estate.
4. The term "owner" as used in K.S.A. 60-2301 applies to the holder of any interest in real estate, regardless of whether the interest is in fee simple.
5. A trust beneficiary possesses an equitable interest in real estate held by the trust regardless of whether the beneficiary is also the settlor and the trustee of the trust.
6. A Chapter 7 bankruptcy debtor may claim the homestead exemption allowed by K.S.A. 60-2301 even though the real property is transferred to a self-settled, living, revocable trust prior to the bankruptcy and the bankruptcy debtor is the both the settlor and a beneficiary of the trust.
The opinion of the court was delivered by: Rosen, J.
The answer to the certified question is determined.
This case involves a certified question from the Tenth Circuit Court of Appeals regarding the application of the Kansas homestead exemption in a bankruptcy proceeding.
Donald and Charlotte Kester purchased a house by warranty deed in 1994 and immediately began occupying it. In 1996, the Kesters transferred the ownership of the house via a quit claim deed to the Charlotte Kester Trust, a revocable trust with Charlotte Kester as the trustee. Both of the Kesters were named as beneficiaries of the Trust.
In 2002, the Kesters filed a joint petition for a Chapter 7 bankruptcy, claiming the house as exempt property under K.S.A. 60-2301, the homestead exemption. The Bankruptcy Trustee objected to the exemption and filed an adversary proceeding to compel the Kesters to turn over the house to the bankruptcy estate. The Federal bankruptcy court denied the Bankruptcy Trustee's motion, holding that the Kesters were entitled to the homestead exemption. The Bankruptcy Trustee appealed, and the bankruptcy court appellate Panel affirmed. The Bankruptcy Trustee then appealed to the Tenth Circuit. Before resolving the Bankruptcy Trustee's appeal, the Tenth Circuit submitted the following certified question for us to decide:
"May a Chapter 7 bankruptcy debtor claim the homestead exemption allowed by Kan. Stat. Ann. § 60-2301 for real property that was placed in a self-settled living revocable trust prior to the bankruptcy, where the settlor and the beneficiary, as well as the bankruptcy debtor, are the same person?"
We review certified questions as questions of law using an unlimited standard of review. Farmers Ins. Co. v. Southwestern Bell Tel. Co., 279 ...