Will the Bankruptcy Trustee Take My Child’s College Fund in Kansas?
By Jill Michaux, Kansas Bankruptcy Attorney on Oct 10, 2007 in Bankruptcy Practice and Procedure, General Bankruptcy Information, Kansas
Is my child’s college fund protected from creditors in bankruptcy in Kansas? Yes and No.
Will the bankruptcy trustee take the money I have been savings for my child’s college education? Yes, if the money is in an ordinary savings account. No, if the money is invested in a Learning Quest account more than two years.
Learning Quest is a 529 education investment program established by the State of Kansas. It is administered by the State Treasurer and managed by private investment companies. A 529 account offers tax deferred earnings growth and other tax advantages.
If you are a Kansas resident and have been saving for your child’s college education in a Learning Quest account, the money in the account is exempt from claims of your or your child’s creditors.
There are two important exceptions to exemption rule:
1) amounts contributed within one year of the date of a bankruptcy petition or the execution of judgment for claims against the account owner, and
2) accounts exceeding $5000 contributed between one and two years before the filing of a bankruptcy or an execution on judgment for claims against the account owner.
Monies covered by these two exceptions are not protected in bankruptcy.
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