diff --git a/templates/book_chapter.yml b/templates/book_chapter.yml
index 4ded955..45b266e 100644
--- a/templates/book_chapter.yml
+++ b/templates/book_chapter.yml
@@ -288,7 +288,21 @@ steps:
       Write in compact format -- this content will be stored as a RAG asset read by the
       NEXT chapter's PASS 0. Every character who appeared must have an entry.
 
-      OUTPUT FORMAT -- write this EXACTLY, filling in real values:
+      ══ DECEASED CHARACTER RULE (HIGHEST PRIORITY) ══
+      If a character DIED before or during this chapter -- whether the death happened in
+      this chapter or was already established when this chapter began -- their entry is:
+
+        ## [Name] — DECEASED (Ch[N])
+        Established: [one sentence: how and when they died]
+        Legacy: [one sentence: how their absence affects the current chapter]
+
+      DO NOT assign Location, Physical, Emotional, Active obligations, Open loops, or Arc
+      to a deceased character. A dead character has NO location, NO emotional state, NO arc.
+      References to a dead character in dialogue, memory, or grief do NOT make them alive.
+      If a character is mentioned only in past tense, memory, or as an absence -- they are DEAD.
+      DO NOT invent a living presence for them. DO NOT put them in the scene.
+
+      ══ LIVING CHARACTER FORMAT ══
 
       # Character State: {chapter_ref}
 
@@ -302,7 +316,7 @@ steps:
       Arc: [XX%] -- [one sentence: what permanently changed in this character this chapter, or "no change"]
       Permanent: [YES if something permanently changed (power gained/lost, relationship status changed, secret revealed); NO otherwise]
 
-      (Repeat for EVERY named character who appeared in this chapter)
+      (Repeat for EVERY named character who appeared in this chapter -- deceased get the short form above)
 
       # World State: {chapter_ref}