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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Last modified: October 10, 2007