One Quiet Bill, Two Big Changes: What Kansas HB 2590 Actually Does

A farm widow we’ll call Ruth found out the hard way that selling appreciated land can

cost a fortune in taxes. Her husband died, their son kept farming, and when she went to

sell a piece of the ground to retire and settle things fairly among the kids, the capital

gains bill on her share ran well into six figures. She did nothing wrong. That’s simply

how Kansas has always taxed jointly owned land when one spouse dies.

A new state law changes that story, and it’s the part everyone’s talking about. It is also

only half of what this bill did.

House Bill 2590 moved through the Kansas Legislature this session with almost no

opposition, carried at the request of the Kansas Bankers Association, and took effect July

1, 2026. Most of the attention has landed on one piece of it, the new community property

trust and the tax break it can deliver. But the bill actually does two separate things. It

creates the Kansas Community Property Trust Act, and it quietly modernizes the

broader Kansas trust code in ways that matter most to families with real wealth. Both

halves are worth understanding, because they serve very different people.

The community property trust, and the tax break behind it

Start with Ruth’s problem, because the fix is the headline. When you sell land, you’re

taxed on the gain, the gap between what you paid and what you sell it for. Ruth and her

husband bought that quarter back in the 1990s for well under two hundred thousand

dollars. It’s worth several times that today. When he died, the tax code reset the cost of

his half to current value, so his half carried no gain. But her half kept its original 1990s

cost. Sell, and she owes capital gains on decades of appreciation on that half alone.

Community property works differently, and that difference is the entire point of the new

trust. In states like Texas and California, when the first spouse dies, both halves of

community property reset to current value, not just one. The Kansas Community

Property Trust Act lets a married couple opt into that treatment by moving assets into a

certain kind of trust, even though Kansas has never been a community property state.

Done right, both halves of Ruth’s ground reset at her husband’s death. She sells near

that value and owes little or nothing.

The Act is specific about what counts. The trust has to declare itself a Kansas community

property trust, be signed by both spouses, name a qualified trustee, meaning a Kansas

resident or a company authorized to serve as a fiduciary in the state, and carry a blunt

written warning that the couple should get independent legal advice because the consequences are real. One quirk worth knowing: it works whether or not the couple

lives in Kansas, which is a deliberate move to pull trust business into the state.

At the first death, half the value belongs to the surviving spouse and half passes under

the deceased spouse’s will. At divorce, the trust splits down the middle, and if a divorce

sits pending for six months it terminates on its own. On the creditor side, one spouse’s

debts can reach that spouse’s half of the trust, which is a step down from the protection

some couples enjoy now.

Now the part the brochures skip. The federal government has never formally blessed

these opt-in community property trusts for the double step-up, so there’s real, if

manageable, uncertainty riding along. The reset cuts both directions, meaning an asset

worth less than you paid gets its cost knocked down, not up. Retirement accounts get

none of this and don’t belong in the trust. And that creditor trade-off deserves a hard

look on any operation carrying debt. This is a strong tool for the right family and a poor

one for others, which is exactly why it’s a conversation and not a form to download.

The half of the bill nobody’s talking about

Here’s what got lost in the headlines. The same bill rewrote parts of the Kansas Uniform

Trust Code, and for families with larger estates, those changes may be the better news.

The most useful is a new way to handle income tax on certain trusts. Wealthy families

often use a grantor trust, one where the person who set it up keeps paying the income

tax on the trust’s earnings even though the assets now belong to the trust. That’s on

purpose. Every tax dollar the settlor pays is a dollar that leaves their estate without using

any gift exemption, which quietly shrinks the eventual estate tax. The trouble was always

flexibility. What happens in a lean year when that tax bill stings? HB 2590 gives the

trustee discretion to reimburse the settlor for that tax, and, just as important, it makes

clear that having that power doesn’t expose the trust to the settlor’s creditors or pull the

assets back into the taxable estate. That second piece is the one that matters, and it lines

Kansas up with long-standing IRS guidance. For a family running this strategy over

decades, it’s a real, usable improvement.

The bill also authorized what planners call quiet trusts. These let a trust stay confidential

from a beneficiary for a time, so a young heir doesn’t learn about a large inheritance

before they’re ready to handle it. To keep that honest, the law pairs it with a designated

representative, someone who stands in for the beneficiary, receives the accountings, and

holds the trustee accountable while the beneficiary is kept in the dark. Families thinking

two and three generations out have wanted these tools in Kansas for a while.

Underneath all of it, the bill gives families more room to write their own rules for how a

trust is run, with one firm limit: you still cannot excuse a trustee’s willful misconduct.

That structural change is what makes the quiet-trust and reimbursement features

actually work.

Who each half is really for

Read together, HB 2590 is almost two bills wearing one number.

For middle-market farm and ranch couples, the ones whose estates fall under the federal

exemption, the community property trust is the headline and the draw. A potential end

to capital gains on appreciated land at the first death, and a cleaner structure than the

fragile multi-trust setups families used to build to chase the same result.

For families with larger, estate-taxable operations already using LLCs and grantor trusts,

the trust-code changes are the quieter prize. The tax-reimbursement fix and the quiet-

trust tools slot directly into the sophisticated planning those families already do, and in

many cases they’ll matter more than the community property piece ever will.

And for Kansas itself, the provisions letting out-of-state couples use these trusts, and

requiring corporate trustees to keep a real presence in the state, are a bid to keep wealth

and trust business here rather than watch it drift off to South Dakota or Tennessee.

What to actually do about it

None of this changes a plan on its own. A statute hands you tools. It doesn’t install them

in documents that were signed years ago. If your family holds appreciated farmland, or

your estate plan already leans on an LLC and a grantor trust, this is the year to pull the

plan out, read it against the new law, and make sure the pieces still fit together. The

families who come out ahead on HB 2590 will be the ones who actually sit down and

look.

At Kennedy Berkley, helping Kansas farm and ranch families, and the advisors who work

alongside them, plan across generations is what we’ve done since 1961. If this new law

raises a question about your own plan, that’s a conversation worth having before the

year gets away.

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This content is for informational purposes only and does not constitute legal advice. It does not create an attorney-client relationship. For advice specific to your situation, contact Kennedy Berkley directly.