Source: https://louisvilledivorce.typepad.com/info/marital_property/
Timestamp: 2019-04-19 15:08:49+00:00

Document:
SC granted Ex-Husband’s motion for discretionary review regarding the appropriate distribution of his IRA account, which Ex-Husband no longer disputed was marital property.
Husband and his employer began contributions to a 401(k) plan in 1992. Husband and Wife married in December 1998. Wife spent most of marriage as a homemaker. Husband’s and his employers’ contributions to the plan continued until January 2001 when Husband resigned; he subsequently rolled the 401(K) over to an IRA. Husband and Wife separated in November 2007 and divorced in December 2008. All matters of support and property division were agreed upon except for the division of Husband’s IRA. At the hearing on this issue, Husband only submitted records of contributions made after the marriage, from August 2000 through January 2001, as both his and his former employers’ other records had been destroyed in a flood. He submitted no records regarding the value of the account on the date of marriage, but he did submit the values when the 401(k) was rolled over to an IRA, in May 2001. Husband argued to the trial court that the contributions from records submitted to the trial court should be extrapolated to establish the amount that was contributed during the marriage and that the remainder should be his nonmarital property. FC found that the entire account was marital as Husband failed to meet the burden of proof as the proponent of a nonmarital property interest. FC then found that the account should be divided equally between the parties as of the date of decree. Husband appealed this ruling to CA, which affirmed FC’s finding that the account was marital property; however, CA determined that because Wife presented no proof that she made any direct or indirect contribution to the account, an equal division of the account was not supported by the record; CA remanded to FC with instructions to award Husband 100% of IRA.
Ex-Wife moved SC for discretionary review, asking 1. Whether FC’s finding that parties were married when an asset was acquired is sufficient to support equal division of the asset under Gaskill v. Robbins; and 2. Whether, on appeal, CA may make a different award of the division of marital property without applying KRS 403.190 factors.
SC found that this premise boils down to requiring FC’s presumption that both parties to a marriage contribute to assets acquired during the marriage. SC disagreed. KRS 403.190 requires FC to consider the contribution of each spouse to acquisition of the asset (including homemaker duties); value of the property set aside to each spouse; duration of the marriage; and economic circumstances of each spouse when the division is to become effective. SC noted that Gaskill emphasized many intangible contributions to acquisition of an asset that FC must consider in its property division determination, but the language does not purport to create a presumption.
SC agreed with Ex-Wife, noting that FC committed same error as FC when it failed to consider all factors of KRS 403.190 when it awarded 100% of IRA to Husband. CA based its decision on evidence of contribution, but did not consider the other three factors. FC’s findings of fact were insufficient, and CA should have remanded for further proceedings.
Reversed and Remanded for to FC for additional fact-finding regarding KRS 403.190 factors.
Issue: Income withholding orders for child support, property division, and reimbursement of marital debt.
Husband’s appeal involved two Income Withholding Orders, each requiring garnishment of his wages. One Order was for child support arrearage, spousal support arrearage, medical care, insurance reimbursement, and attorney’s fees. The other was for wife’s monetary share of marital property and reimbursement for a marital debt she paid. Husband claimed the Order for child support failed to take into account wife’s support arrearage as a result of a change in custody and further claimed that Kentucky’s Uniform Interstate Family Support Act (UIFSA) does not apply to marital debt or property and therefore the Order for property division and reimbursement of marital debt exceeds statutory limitations applicable to ordinary garnishment of non-child support debt.
The parties were married in 1978 and had two children. Husband is a physician and wife is an attorney. Husband filed for divorce in November 1990 and in June, 1996 the court issued a ruling on all financial issues, including child support. This judgment was appealed and on August 28, 1998 the trial court was affirmed on all issues.
Wife served an Order of Wage Garnishment on husband’s employer (Louisville Children’s Eye Specialists, PSC, of which husband was the only shareholder) in September, 1996 and from September, 1996 through February, 2000, the PSC remitted $8817.74 to wife pursuant to the Order.
In October, 1996 parties signed Agreed Order giving husband physical custody of children, discontinuing his child support while the children were with him, reserving the issue of child support to be paid by wife and agreement that wife’s child support would be set off as against husband’s arrearage.
On January 30, 2003, wife moved family court to hold husband in contempt for failing to satisfy June, 1996 judgment and hold husband’s PSC liable for failure to respond to the 1996 Order of Wage Garnishment. Husband responded with request that court establish wife’s child support for the period he had custody and determine how much he actually owed under the June, 1996 judgment after offsetting wife’s obligation.
Family Court found that the 1996 Agreed Order had modified the original child support order and that it was an enforceable order, the terms of which were at issue in the pending litigation, and that wife’s off-set applied only to the child support arrearage issues. The court found husband’s PSC liable to wife for funds that should have been withheld plus 12% interest and specifically found that none of the $121,586.76 for “other support” was from child support arrearage. Trial Court decided that child support and other support contempt proceedings would be heard separately as unrelated claims. Nevertheless, the court held husband in civil contempt for failure to pay the entire June, 1996 judgment by an Order dated April 26, 2006.
Husband moved to Illinois in July, 2005 and in August, 2006 wife moved for, and court granted, an Income Withholding Order for $639,773.12 encompassing the entire June, 1996 judgment, with interest, and did not determine amount of child support owed by wife. Husband moved to vacate and argued that property division and marital debt does not constitute support.
In March, 2007, wife requested the court to enter superseding orders because the February, 2009 orders did not comply with Illinois law, to which husband objected. He asserted that the failure to determine the amount to be offset before entering orders constituted an abuse of discretion or a violation of due process and that UIFSA does not support issuance of orders for property division or reimbursement of marital debt.
Supreme Court held that the family court’s failure to determine the amount wife owed was an abuse of discretion and remanded for further proceedings. The Court reasoned that since the parties had agreed that wife’s child support would be determined and offset against husband’s arrearage and their agreement was found to be enforceable in the court’s September 2004 Order, it was error to enter an Income Withholding Order before offsetting wife’s obligation.
The Supreme Court disagreed with the Court of Appeals’ holding that the statutory definition of “support order” was sufficiently broad to include all items in the original 1996 trial court judgment, and held that monies owed for interest in marital property or for payment of marital debt cannot be construed as support within the context of the Family Support Act. The court reasoned that the UIFSA does not provide for litigation of matters collateral to child or spousal support, thus reimbursement of a marital debt paid is not child support and cannot be enforced by an Income Withholding Order.
The decision of the Court of Appeals is reversed and matter remanded to Jefferson County Family Court for proceedings consistent with opinion.
"Domestic Relations. Dissolution of Marriage. Division of Real Property. Issues include the extent and divisibility of marital interest in real property that has been placed in an irrevocable trust and the application of Brandenburg v. Brandenburg, 617 S.W.2d 871 (Ky. App. 1981)."
On September 11, 2007 California Governor Arnold Schwarzenegger signed into law SB 353 amending Family Code §6320 to provide that a Court, upon a showing a good cause, may grant exclusive care of any animal to a party, and may further restrain the other party from taking, attacking or harming the animal.
Ex-Wife appealed TC’s division of marital property, arguing that division was not in “just proportions,” as TC’s division of property earned between date of separation and date of decree was not equal. While working full-time for Brown & Williamson during marriage, Ex-Husband attended law school and Brown & Williamson paid his law-school tuition and expenses. In 2003, he began work at a law firm where B&W was his primary client while B&W closed its Louisville, KY offices to move out of state. Ex-Husband’s income drastically increased as a result of this work to over $500,000 in 2004. However, by the time of the trial, B&W’s move was nearly complete and Ex-Husband received very little income from this source and was building up a construction law practice. During the marriage and at the time of the trial, Ex-Wife was employed as a senior tax manager, earning approximately $115,000 annually. After the parties’ separation in October 2004, Ex-Wife discontinued contributions to utilities and mortgage payments on the marital residence, and both parties continued to share homemaker and parenting duties until the time of trial. TC equally divided property earned up to the date of separation; however, although it declared that the property earned between the date of separation and the date of decree was marital property, it allocated a substantially larger portion of this marital property to Ex-Husband. TC found that equal division of the property earned up to the date of separation would leave each party in good financial circumstances and that it was “just” to allow each party to keep the income earned after the date of separation and the assets purchased with that income.
Ex-Wife first contended to CA that unequal distribution of post-separation income and assets did not represent a division in “just proportions.” CA disagreed with Ex-Wife that post-separation assets must be divided in same proportion as pre-separation assets or divided equally. Citing Stallings v. Stallings, CA noted that making a division in “just proportions” requires TC to consider the factors of 403.190(1)(a)-(d), one factor of which requires consideration of the contribution of each spouse to the acquisition of the property. CA found that TC properly considered these factors in making its division, and found no error.
Ex-Wife also contended that TC failed to consider her contribution to Ex-Husband’s law degree when dividing the post-separation assets. CA noted that, although a professional degree is not marital property, it can be considered an asset of the marriage in determining the parties’ respective contributions when dividing marital property. CA held that TC appropriately considered Ex-Wife’s claim to contribution towards the law degree, and that TC properly rejected her claim, as Ex-Husband’s law school tuition was paid for by B&W, the degree was obtained without a break in his employment, he continued parenting duties while in law school, and Ex-Wife continued to advance her career during that time. TC’s division of property affirmed.
"Domestic Relations. Dissolution of Marriage. Division of Real Property. Issues include the extent and divisibility of marital interest in real property that has been placed in an irrevocable trust and the application of Brandenburg v. Brandenburg, 617 S.W .2d 871 (Ky. App. 1981)."
Thanks so much, Mike, for posting the briefs. Now I hope SCOKYBLOG will post the oral arguments! This is a very interesting case. Movant claims 500 years of trust law stands in the balance.
Wife’s daughter, also the personal representative of Wife’s estate, appealed TC’s order dismissing Wife and Husband’s dissolution action and denying her motion to be substituted as a party and to revive the dissolution action. The primary issue was whether TC could and should have entered a nunc pro tunc decree dissolving the marriage after Wife’s death and allowing her portion of the marital property and past due temporary maintenance payments to go to her estate. CA affirmed.
In April 2004, TC awarded Wife $6000 per month in temporary maintenance and ordered the sale of Husband’s business and the parties’ vacation home, noting that both constituted marital property. About one month later, Wife died. A few days after her death, TC entered an order noting Wife’s reported death the previous day and abating all orders requiring future action, including the sale of the marital assets. Subsequently, TC found that the real party in interest was Wife’s estate and provided the estate thirty days to enter an appearance for any matters pertaining to the claims of or against the estate. In August, Daughter notified TC that she was the personal representative of Wife’s estate and that she intended to revive the action.
Daughter argued that TC had already decided to dissolve the parties’ marriage and divide the property, and therefore, it erred when it failed to revive the action, to enter a decree of dissolution, or to equally distribute the marital property. She urged the application of principles of equity to prevent an injustice from occurring. She also contended that Wife’s right to maintenance had vested at the time of her death, despite Husband’s attempt to terminate this obligation. However, she backed her contentions with only one 1897 case involving a bigamous marriage.
CA noted that all of the remaining case Kentucky law clearly stands for the proposition that a divorce case is strictly personal, and that all other issues attending thereto are terminated upon the death of either party. The law is clear that only after a decree in divorce is granted, or perhaps a written separation agreement has been entered into by the parties, can the court continue to litigate the attending issues, including the equitable distribution of property. Only after a decree in divorce is granted, and thereafter one of the parties dies, can the court continue with the equitable distribution of marital property. If, on the other hand, TC had entered a decree, or if the judicial function had terminated without the formal entry of a decree, the death of a spouse would not affect the matter. CA noted one unpublished case in which CA approved entry of a nunc pro tunc order, but in that case, TC had orally granted a decree but the death occurred before the written decree could be prepared and signed. In that case, CA noted that the entry of the nunc pro tunc decree was proper to give the court's judicial act its proper meaning and effective date.
CA noted that there may remain other avenues of relief for Daughter, as existing orders for maintenance and property distribution may be pursued in a different forum. In essence, TC lost jurisdiction of the subject matter upon Wife’s death. CA provided that the nunc pro tunc rule may be used to make the record speak the truth, but not to make it speak what it did not speak but ought to have spoken.
What does Intellectual Property have to do with divorce law? Well, if it is property and it has value the IP belongs on the asset division spreadsheet. Mediator Victoria Pynchon has launched the new IP ADR Blog on which she posts about the value of domain names, And While You're At It, Throw In The Domain Name.
Shown v. Shown, 2004-CA-000988-MR. Discretionary review granted June 7, 2006; not for publication by operation of CR 76.28(4).
Whether husband’s entire Kentucky Teacher’s Retirement Account is exempt from division as marital property pursuant to KRS 161.700. The Court held yes, such retirement is exempt.
The husband’s KTRS account was valued at $81,410.27 and the wife’s Fidelity SEP-IRA was valued at $1895.97. The husband argued that his account was exempt pursuant to KRS 161.700. The wife argued that only the portion of his account up to the amount of her IRA was exempt from division as a marital asset, pursuant to KRS 403.190(4). The trial court held that KRS 161.700 controlled and found that the husband’s entire account was exempt. The wife appealed.
This is a case of first impression for Kentucky. There is a conflict between the two statutes. KRS161.700 (2) states that KTRS benefits are exempt from division as marital property in divorce proceedings. Yet, KRS 403.190(4) states that the level of exception provided to the spouse with the greater retirement benefits shall not exceed the amount of exemption provided to the other spouse. Since KRS161.700 (2) is more specific, it controls. Furthermore, two amendments were made to KRS161.700 after the amendment to KRS 403.190 (4), neither of which addressed the conflict herein. The amendments omitted any language permitting attachment for either court-ordered division of marital property or maintenance. The Court found this to be a clear indication of legislative intent. The Court declined to decide whether the result, the husband’s entire account being exempt, was equitable.
In the alternative, the Court held that the wife’s IRA did not qualify as retirement benefits under KRS 403.190(4), as it is not regulated by ERISA, not regulated by state or local government, and not a plan qualified under Section 401(a) of the IRC.
Many corporations are feeling the heat and have been in the news for back-dating stock options. This Forbes article posits that the issue may have a gnarly impact on such options in the event of divorce. It doesn't suggest solutions, but sometimes the important thing is to be aware that there may be a problem so your expert can make that part of the analysis.
"As soon as the divorce papers are served, the asset shuffling begins. It's amazing what angry spouses try to do--and what they can get away with" is the distressing title of an article the November 13, 2006 edition of Forbes, published online last week.
A correction to the article: the third edition of Equitable Distribution of Property by Brett R. Turner, was published in 2005 and the dissipation section is now up to 69 pages. It is published by Thomson/West.

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