Court Opinion

ID: 9655664
Source: CourtListenerOpinion
Date Created: 2023-08-23 19:18:42.899904+00
Date Added: 2024-06-11T18:13:21.022696
License: Public Domain

COOPER, Justice,
concurring.
The only issue presented to this Court by this case is whether a disability annuity payable to a disabled firefighter pursuant to KRS 67A.460 is divisible as marital property in a divorce proceeding. The answer is found in KRS 67A.620, which provided at the time of this divorce:
The right to a retirement annuity, disability annuity, survivor’s annuity or benefit, death benefit, or any other benefit under the provision hereof, by whatever name called, or refund, is personal with the recipient thereof, and the assignment, garnishment, execution or transfer of such benefit or any part thereof shall be void, except as herein provided. Any such annuity, benefit or refund shall not answer for debts contracted by the person receiving the same, and it is the intention of this section that they shall not be attached or affected by any judicial proceeding. (Emphasis added.)
Similar, though less explicit, language in the United States Code pertaining to social security benefits, 42 U.S.C. § 407(a),1 military retirement benefits, 10 U.S.C. § 1440,2 and railroad retirement benefits, 45 U.S.C. § 231m(a),3 has consistently been held to preclude a division or setoff of those benefits as marital or community property in a divorce action, e.g.:
Social security benefits: Gross v. Gross, Ky.App., 8 S.W.3d 56, 58 (1999) (though such benefits can be considered in determining the “economic circumstances” of the respective parties pursuant to KRS 403.190(1)(d)); see also In re Marriage of Boyer, 538 N.W.2d 293 (Iowa 1995); Pongonis v. Pongonis, 606 A.2d 1055 (Me.1992).
Military retirement benefits: McCarty v. McCarty, 453 U.S. 210, 226-28,101 S.Ct. 2728, 2738-39, 69 L.Ed.2d 589 (1981), further holding that such benefits are also not subject to division because “retired pay is a ‘personal entitlement’ ” 4 (compare that language with “personal with the recipient” in KRS 67A.620).
Railroad retirement benefits: Hisquierdo v. Hisquierdo, 439 U.S. 572, 583-87, 99 S.Ct. 802, 809-11, 59 L.Ed.2d 1 (1979); *912Frost v. Frost, Ky.App.; 581 S.W.2d 582 (1979).
Any doubt as to whether KRS 67A.620 was intended by the General Assembly to shield a firefighter’s retirement annuity from division or attachment in a divorce proceeding was erased when the General Assembly amended the statute in 1998 to permit attachment for court ordered child support but, significantly, omitted any language permitting attachment for court ordered division of marital property or spousal maintenance. 1998 Ky.Acts, ch. 255, § 33. Thus, this case could and should be decided solely within the framework of the statutory scheme of KRS 67A.360-.690. And, even if the General Assembly had not enacted KRS 67A.620, this case could be decided by application of existing Kentucky law established in Mosley v. Mosley, Ky.App., 682 S.W.2d 462 (1985) (post-dissolution installments of workers’ compensation benefits are not marital property because they replace diminished future earnings due to a work-related injury or disease).
Kentucky has long adhered to the principle that the determination of whether property is classified as marital or non-marital depends primarily on “the time at which equity is acquired and the source of the funds used to acquire that equity.” Louise E. Graham and James E. Keller, 15 Kentucky Practice: Domestic Relations Law § 15.62, at 598 (2d ed. West 1997); see also Louise E. Graham, Using Formulas to Separate Marital and Nonmarital Property: A Policy Oriented Approach to the Division of Appreciated Property on Divorce, 73 Ky.L.J. 41, 44 (1984-85). Thus, in Neuman v. Neuman, Ky., 597 S.W.2d 137, 139 (1980), the investment of the husband’s $52,000.00 inheritance in the purchase of the marital residence was held to create a proportionate nonmarital interest in that same residence upon dissolution of the marriage; in Daniels v. Daniels, Ky.App., 726 S.W.2d 705 (1986), overruled on other grounds, Neidlinger v. Neidlinger, 52 S.W.3d 513 (2001), common stock purchased during the marriage was classified as the husband’s nonmarital property because the funds used to purchase the stock were traceable to the husband’s inheritance; in Brandenburg v. Brandenburg, Ky.App., 617 S.W.2d 871, 872 (1981), “nonmarital contribution” was defined as creation of equity by amounts expended after the marriage by either spouse from traceable nonmarital funds; and in Jessee v. Jessee, Ky.App„ 883 S.W.2d 507 (1994), expenditure of the husband’s lump sum workers’ compensation settlement to purchase the parties’ residence was held to be a nonmarital contribution insofar as the settlement represented lost wages that accrued prior to the marriage.
If it were necessary to decide this case without" reference to KRS 67A.620 (and it is not), I would simply hold that the principle adopted in Mosley, supra, creates an exception to the “source of funds” rule for disability pensions and avoid the multiplicity of dicta in the majority opinion that could lead a reader to believe that our decision here represents a departure from the “source of funds” rule in favor of a general “nature of property replaced” rule. Further, the statement of the holding, ie., “we adopt the approach recommended by the American Law Institute that determines the character of disability benefits according to the character of the property [emphasis added] those benefits replace,” citing Principles of the Law of Family Dissolution: Analysis and Recommendations § 4.08(2)(b) (A.L.I., Proposed Final Draft, Part 1,1997), is misleading. Section 4.08(2)(b) of the A.L.I. proposed final draft does not state that the character of disability benefits is determined by the property those benefits replace but that “[disability pay and workers’ compensation payments *913are marital property to the extent they replace income or benefits [emphasis added] the recipient would have earned during the marriage but for the qualifying disability or injury.” Id. Substitution of the word “property” for “income or benefits” could lead some readers to conclude that our holding here is broader in scope than its presumed application only to disability retirement benefits.
Accordingly, I concur in the result reached in this case because that result is mandated by KRS 67A.620.1 do not join in the rationale articulated by the majority opinion in support of that result.
GRAVES and JOHNSTONE, JJ„ join this concurring opinion.

. The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

. [N]o annuity payable under this subchapter is assignable or subject to execution, levy, attachment, garnishment, or other legal process.

. [N]o annuity or supplemental annuity shall be assignable or be subject to any tax or to garnishment, attachment or other legal process under any circumstances whatsoever, nor shall the payment thereof be anticipated.

. Congress subsequently enacted The Uniformed Services Former Spouses Protection Act (Public Law 97-252), 10 U.S.C. 1408, to permit division of "disposable retired or retainer pay,” but not disability retirement pay. Davis v. Davis, Ky., 777 S.W.2d 230 (1989).