In re Brewer, 544 B.R. 177

Ronald and Teresa Brewer (Missouri residents) filed a joint Chapter 7 on Dec. 5, 2014; they claimed their Carl Junction home (listed at $220,000, $34,469 equity) as exempt under tenancy by the entirety (TBE).
Three months before filing, the Brewers created the BREWER TRUST (settlors/co-trustees/primary beneficiaries: both spouses) and transferred the home into it.
The trust preserved survivorship but expressly granted each spouse a unilateral right to partition and to restrict, transfer, or withdraw one-half of the trust assets.
Trustee objected, arguing the trust is not a valid Missouri qualified spousal trust (QST) under RSMo § 456.950 (as in effect at transfer) and that the partition right severs the TBE or is property of the estate under 11 U.S.C. § 541(a).
The Brewers argued the trust qualified as a QST, preserving TBE protection, and alternatively claimed the Trustee waived challenges by stipulation; no evidence was presented about intent for creating the trust.
Court found no binding stipulation, held the trust’s partition right inconsistent with the statutory QST requirements in effect at petition date, and granted the Trustee’s objection (exemption denied).

Issue	Trustee's Argument	Brewers' Argument	Held
Whether transfer of TBE property into the BREWER TRUST severed the TBE because the trust is not a valid QST under RSMo § 456.950	BREWER TRUST’s unilateral partition/withdrawal right makes it ineligible as a QST so TBE was severed	The BREWER TRUST is a valid QST; transfer preserved TBE exemption	Held: Trust is not a valid QST; transfer severed TBE and exemption denied
Whether Trustee waived the challenge by stipulating the trust was a QST	No binding stipulation existed; even a stipulation on law would not bind the court	Trustee stipulated at hearing, so Brewers say challenge waived	Held: No factual stipulation; legal issues are for court, so no waiver
Whether the right to partition became property of the bankruptcy estate that Trustee can exercise	Even if trust terms left partition right, that right is estate property under § 541(a) and Trustee may exercise it	Partition right cannot be used to defeat TBE exemption if trust were valid QST	Held: In the alternative, partition right is estate property Trustee may exercise
Whether post-petition amendments to RSMo § 456.950 (2015) affect exemption determination	Exemptions are determined as of filing; post-petition statutory changes do not apply	Brewers urged relevance of amendment loosening QST requirements	Held: Amendment is inapplicable to this case (petition-date law controls)

Peoples’ State Bank of Wells v. Stenzel, 301 F.3d 945 (8th Cir.) (burden of proof on trustee to object to claimed exemption)
Gander v. Livoti, 250 F.3d 606 (8th Cir.) (stipulations of law not binding on court)
In re Bellingroehr, 403 B.R. 818 (Bankr. W.D. Mo. 2009) (trust preserving mutual restrictions can maintain TBE)
In re Stanke, 234 B.R. 439 (Bankr. W.D. Mo. 1999) (transfer into trusts with severing language can destroy TBE)
In re Reuter, 499 B.R. 655 (Bankr. W.D. Mo. 2013) (co-trustee rights can be property of the estate)
Wolfe v. Jacobson (In re Jacobson), 676 F.3d 1193 (9th Cir.) (bankruptcy exemptions are determined as of the petition date)
In re Haines, 528 B.R. 912 (Bankr. W.D. Mo. 2015) (scope of TBE protection against separate creditors)