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Advance Planning Bankruptcy Exemptions

by Adam Mack

Kansas bankruptcy law provides several exemptions for those who are planning ahead regarding the end of their lives.

Life Insurance

Among the exemptions available to those who file bankruptcy in Kansas is the life insurance exemption, found in K.S.A. §40-414(a). It provides that life insurance policies are exempt from claims of creditors, whether they are the insured’s creditors (prior to the insured’s death) OR the creditors of the beneficiaries. Like many Kansas exemptions, this one is quite generous. Even policies issued by non-traditional insurers (such as fraternal societies) are protected, and there is no limit to the amount that can be claimed as exempt.

The only significant restriction is that the life insurance policy be purchased at least one year prior to filing bankruptcy. The purpose of this restriction is to prevent people from “hiding” assets in a life insurance policy on the eve of filing bankruptcy. (Back in the mid 1980’s, one very wealthy debtor did just that, and so our legislature closed that loophole in 1988, though not in time to prevent the wealthy debtor from shielding more than a million dollars that way. While objections might be raised that a large life insurance policy was purchased in bad faith or in an attempt to rip off one’s creditors, the one-year requirement makes such an objection hard to prove, providing even greater protection to the honest debtor filing bankruptcy.)

Burial Plot

This is a very straightforward exemption found in K.S.A. §60-2304(d) that is almost never contested. There are no limitations on the dollar amount or the time frame for purchasing the final resting place of the debtor. The plot could be a burial plot, crypt, or any cemetery lot.

Cemetery Merchandise Trust

Like the Burial Plot exemption, this exemption found in K.S.A. §60-2313 is simple and straightforward. There are no limitations on the dollar amount or time frame for investing in a cemetery merchandise trust.

Funeral Plan Prepayments

This exemption is found right next to the Cemetery Merchandise Trust exemption and is as simple and straightforward. There are no limitations on the dollar amount or time frame for putting money into a prepaid funeral plan as defined by K.S.A. §16-310).


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!