Court Opinion

ID: 4682306
Source: CourtListenerOpinion
Date Created: 2021-04-29 15:07:28.0503+00
Date Added: 2024-06-11T08:04:07.428246
License: Public Domain

Supreme Court of Kentucky
                                 2018-SC-0451-DG

LAURA R. NORMANDIN                                                   APPELLANT

                   ON REVIEW FROM COURT OF APPEALS
V.                         NO. 2016-CA-0392
                  OLDHAM CIRCUIT COURT NO. 13-CI-00741

SCOTT W. NORMANDIN                                                       APPELLEE

             ORDER DENYING PETITION FOR REHEARING AND
                        MODIFYING OPINION

      The Court hereby orders that the Opinion of the Court, rendered

December 17, 2020, be MODIFIED, and the attached opinion is hereby

ordered substituted for the opinion originally rendered. Additionally,

Appellee's Petition for Rehearing is denied.

      Minton, C.J.; Conley, Hughes, Keller, Lambert, and VanMeter, JJ.,

sitting. Nickell, J., not sitting. All concur.

      ENTERED: APRIL 29, 2021.

                                          _______________________________________
                                          CHIEF JUSTICE
                                                 MODIFIED: APRIL 29, 2021
                                            RENDERED: DECEMBER 17, 2020
                                                        TO BE PUBLISHED

               Supreme Court of Kentucky
                               2018-SC-0451-DG

LAURA R. NORMANDIN                                                   APPELLANT

                  ON REVIEW FROM COURT OF APPEALS
V.                        NO. 2016-CA-0392
                 OLDHAM CIRCUIT COURT NO. 13-CI-00741

SCOTT W. NORMANDIN                                                    APPELLEE

               OPINION OF THE COURT BY JUSTICE KELLER

       AFFIRMING IN PART, REVERSING IN PART, AND REMANDING

      Laura R. Normandin (Laura) appeals from an order entered by the

Oldham Circuit Court, Family Division, on February 2, 2016, and subsequent

denial of her motion to alter, amend, or vacate the order entered on March 21,

2016. Specifically, she appeals the Family Court’s classification and division of

marital property, calculation of maintenance, and calculation of child support.

The Court of Appeals affirmed the decision of the Oldham Family Court in

whole. Having reviewed the record and considered the arguments of the

parties, we hereby affirm in part, reverse in part, and remand for further

proceedings consistent with this opinion.
                                I. BACKGROUND

      This case stems from Laura’s dissolution of marriage action against Scott

W. Normandin (Scott). The parties were married in Madison County, Virginia,

on January 25, 2004. The marriage resulted in the birth of four children who

are still minors. In November 2013, Laura filed for dissolution. The parties

attempted to reconcile for approximately a year, before moving forward with the

divorce proceedings that ultimately culminated in a trial on January 6, 2016.

The Oldham Family Court issued its findings of fact and conclusions of law on

February 2, 2016.

      Prior to and immediately after their marriage, Laura worked as a

commercial real estate manager in Washington, D.C. Following the birth of

their first child in 2005, Laura focused on responsibilities as a stay-at-home

mother and homemaker. From that point until the time of divorce, Laura had

no substantial source of income outside of marital funds with the exception of

her receipt of approximately $450,000 from her father’s estate while the divorce

proceedings were ongoing in the trial court below.

      Scott was the sole income earner for the family after Laura left the

workforce. At the time of the divorce proceeding he was employed by Humana

as the Chief Security Officer with a base salary of $226,096 per year. In this

position, he was also the recipient of regular bonuses and incentive-based

income, including restricted stock units (RSUs). Classification of Scott’s RSUs

is the primary issue before the Court. The Humana RSUs were usually granted

annually, at Humana’s discretion, and vested to the employee after three years.

                                        2
Prior to vesting, the RSUs were subject to restrictions, unavailable to the

employee, and non-transferrable until such restrictions lapsed and vesting

occurred. The primary restriction was that if Scott was no longer employed by

Humana on the date of vesting, any RSUs would be forfeited with only limited

exceptions (retirement, disability, or death) which are not applicable to Scott.

      The RSUs represented a significant portion of the couple’s marital

income. In fact, Scott admitted that his 2013 grant of RSUs was due to vest

shortly after the conclusion of the trial and would result in a payment of

approximately $220,000. In addition to the 2013 grant of RSUs, Scott had

similar grants in 2014 (vesting in 2017) and 2015 (vesting in 2018). However,

at the time of the trial, Humana was in discussions with Aetna regarding a

merger, clouding Scott’s job outlook due to likely restructuring. This merger

was never consummated.

      In addition to the RSUs, the parties contested the classification and

equitable distribution of two other pieces of property: Scott’s 401k and a plot of

unimproved land in Wyoming. The 401k was valued at $499,879. At issue was

the portion of the 401k deemed Scott’s nonmarital property. The account

consisted of funds derived from Scott’s employment at Humana during the

marriage, Honeywell both prior to and during the marriage, and the Secret

Service and British Aerospace prior to the marriage. At trial, Scott testified to

rolling his retirement funds from his premarital employment into the Humana

account in 2009, claiming $77,000 as the present nonmarital value of the

                                         3
account. Laura argued that Scott did not sufficiently prove any nonmarital

interest in the 401k.

      The unimproved Wyoming property was purchased prior to the parties’

marriage. Laura stated she paid the initial down payment of $5,000 for the

property when they purchased it. Scott testified that although Laura made the

down payment, he reimbursed her for it thereafter. They both argued that

based on their payment of the down payment, a portion of the property should

have been classified as their individual nonmarital property. Neither party

provided documentation to support their testimony.

      The family court in its February 2, 2016, order found all proceeds from

Scott’s unvested RSUs were his nonmarital property and did not include them

in his income when calculating maintenance or child support. It accepted

Scott’s $77,000 estimate of the value of his nonmarital portion of his 401k. It

found neither party proved by clear and convincing evidence a nonmarital

interest in the Wyoming property, deeming it all marital and dividing its value

equally.

      In determining maintenance, the trial court found Laura’s reasonable

needs to be $6,000 per month. After considering the nonmarital inheritance,

her portion of the marital property awarded, and her ability to become

employed, the trial court awarded her maintenance of $1,500 per month for

forty-eight months. The trial court granted joint custody, identifying Laura as

the primary residential parent, with Scott having custody every other weekend

and Wednesdays after school. Turning to child support, the trial court found

                                        4
the couple’s monthly adjusted income was above the statutory guideline ceiling

of $15,000. Applying the top of the guidelines and declining to adjust upward

from that standard resulted in a support award of $2,199.60 per month paid

by Scott to Laura.1

      Following the decree, both parties filed motions to alter, amend, or vacate

and motions for additional findings of fact. Those motions were denied by the

trial court in a second order on March 21, 2016. Laura appealed that order to

the Court of Appeals, disputing the classification of the RSUs, the retirement

account, and the Wyoming property, as well as the calculation of maintenance

and child support, and the denial of attorney’s fees.

      The Court of Appeals affirmed the Oldham Family Court in full. The

Court of Appeals held that the RSUs were Scott’s separate property relying

principally on Sharber v. Sharber, 35 S.W.3d 841 (Ky. App. 2001), and

Gallagher v. Gallagher, 2012-CA-00671-MR, 2013 WL 5886028 (Ky. App.

November 1, 2013). The Court of Appeals held that the trial court’s

classification and division of the 401k was supported by substantial evidence

and that the trial court properly found neither party met the burden of proving

a nonmarital interest in the Wyoming property. As to maintenance and child

support, the Court of Appeals held that under an abuse of discretion standard

the trial court did not abuse its discretion in awarding $1,500 per month

      1 In addition to the child support ordered to Laura, Scott was under an order for
child support in the amount of $680 to a prior born child and also to maintain the
children on his health insurance policy.

                                          5
maintenance or in its decision to deny an upward adjustment from the child

support guidelines. Laura now appeals the Court of Appeals’ decision with

respect to the classification of the RSUs, the 401k, and the Wyoming property,

as well as the calculation of maintenance and child support.

                               II. STANDARD OF REVIEW

      The conclusion of whether property is marital or nonmarital is reviewed

under a two-part inquiry in which the factual findings made by the court are

reviewed under the clearly erroneous standard and the ultimate legal

conclusion denominating the item as marital or nonmarital is reviewed de

novo.2 KRS3 403.190 states that “all property acquired by either spouse after

the marriage and before the decree of legal separation is presumed to be

marital property,” a presumption that may be rebutted by showing the

acquisition was via a means excepted by the statute. The trial court’s specific

findings of fact as to the acquisition of the property are viewed under a clearly

erroneous standard while its conclusions of law applying those facts are

reviewed de novo.4 Lastly, equitable division of marital property need not be

equal, rather only “in just proportions,” and we will not disturb the trial court’s

equitable division unless the trial court has abused its discretion.5

       2 Smith v. Smith, 235 S.W.3d 1, 6 (Ky. App. 2006); see also Holman v. Holman,

84 S.W.3d 903, 905 (Ky. 2002) (The trial court’s classification of property is a
statutory conclusion of law which we review de novo.).
      3   Kentucky Revised Statute.
      4   Barber v. Bradley, 505 S.W.3d 749, 754 (Ky. 2016).
      5   Smith, 235 S.W.3d at 6.

                                           6
      The standard of review for determinations of maintenance and child

support is an abuse of discretion.6 “The test for abuse of discretion is whether

the trial judge’s decision was arbitrary, unreasonable, unfair, or unsupported

by sound legal principles.”7 An appellate court will not disturb the holdings or

substitute its own judgment when the evidence supports the trial court’s

decision and it did not abuse its discretion when deciding the case.8

                                     III.   ANALYSIS

A. The trial court improperly classified the restricted stock units as
entirely nonmarital property.

      This Court has never directly addressed the marital division of RSUs. The

Court of Appeals, when considering this issue, has classified them

inconsistently.9 Kentucky statutes are deceptively simple in classifying property

as marital or nonmarital. KRS 403.190(3) states that:

      [a]ll property acquired by either spouse after the marriage and
      before a decree of legal separation is presumed to be marital
      property, regardless of whether title is held individually or by the
      spouses in some form of co-ownership such as joint tenancy,
      tenancy in common, tenancy by the entirety, and community
      property.

      6 Stipp v. St. Charles, 291 S.W.3d 720, 727 (Ky. App. 2009) (reviewing
maintenance); Downing v. Downing, 45 S.W.3d 449, 454 (Ky. App. 2001) (reviewing
child support).
      7   Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999) (citations omitted).
      8   Combs v. Combs, 787 S.W.2d 260, 262 (Ky. 1990).
      9 See Gallagher v. Gallagher, No. 2012-CA-00671-MR, 2013 WL 5886028, *11-
12 (Ky. App. November 1, 2013) (holding the Defendant’s UPS RSUs were too
speculative to be included in the marital estate.); but see Penner v. Penner, 411 S.W.3d
775, 781 (Ky. App. 2013) (unvested RSUs may represent marital property, income to
RSU recipient, or proportional income to each party at vesting).

                                            7
(Emphasis added). This Court has broadly defined property in this context as

referring “to a determinate thing or an interest in a determinate thing.”10 The

statute goes on to state the party seeking to rebut the presumption has the

burden to show the property meets one of the exceptions specified in KRS

403.190(2).11 Those exceptions are limited to: (i) property acquired by gift,

bequest, devise or descent; (ii) property acquired in exchange for such property

or property acquired prior to marriage; (iii) property acquired after decree of

legal separation; (iv) property specifically excluded by valid agreement; or (v)

the increase in value of property acquired before marriage, where such increase

did not result from the active efforts of the parties during marriage.12

      RSUs are “a form of equity-based compensation under which the issuer

company promises to deliver whole shares of stock of the company in the

future to an employee at no cost to the employee, if pre-specified vesting and

distribution conditions are satisfied.”13 Vesting conditions generally tie the

employee’s compensation either to a performance metric or time of service

      10   Travis v. Travis, 59 S.W.3d 904, 909 n.6 (Ky. 2001).
      11   KRS 403.190(3).
      12   KRS 403.190(2).
      13  Michael J. Halloran, et al., VENTURE CAPITAL & PUBLIC OFFERING NEGOTIATION,
Ch. 15 § 7 (3d ed. 2020) (hereafter VCPON); see also In re Marriage of Micheli, 15
N.E.3d 512, 521 (Ill. App. Ct. 2014) (“RSUs are a form of deferred compensation paid
in stock that upon the expiration of any restrictions become fully tradable common
stock.”).

                                             8
metric.14 Unvested restricted stock units generally are not transferable.15

States are divided on how to classify such assets in a divorce.16

      Laura analogizes the RSUs in question to the contingency fee contract at

issue in this Court’s recent Grasch opinion.17 We note that Grasch was

rendered after completion of the trial court’s consideration of this case and

submission of briefs to the Court of Appeals, so the lower courts did not have

the benefit of this Court’s opinion in that case as guidance. In Grasch, the

parties contested the appropriate classification of an attorney’s contingency fee

contract entered into during the marriage, but did not become payable until

after the divorce.18 We held that a contingency fee contract constitutes marital

property and is subject to division in a dissolution proceeding.19 We stated that

such division was limited to the proportion of the work performed before the

      14   Id.
      15   EXECUTIVE COMPENSATION § 2715 (Wolters Kluewer, 2018 WL 2447699).
      16  See Schiavone v. Schiavone, No. 314058, 2014 WL 1401686, at *4 (Mich. Ct.
App. Apr. 10, 2014) (Defendant's restricted stock options that vested after the divorce
were not earned during the marriage.); Walsh v. Walsh, No. A-4046-03T2, 2006 WL
2315846, at *8 (N.J. Super. Ct. App. Div. Aug. 11, 2006) (holding subject RSUs were
not vested prior to the petition for dissolution and therefore not subject to equitable
distribution); 750 Ill. Comp. Stat. Ann. 5/503 (2019) (“[A]ll stock options and
restricted stock…granted to either spouse after the marriage and before a judgment of
dissolution of marriage or legal separation or declaration of invalidity of marriage,
whether vested or non-vested or whether their value is ascertainable, are presumed to
be marital property.”); In re Marriage of Hug, 201 Cal. Rptr. 676, 678 (Cal. Ct. App.
1984) (established a ratio of marital to nonmarital for unvested assets as the number
of months employed by the grantor while married divided by the total number of
months employed upon vesting); Wendt v. Wendt, 757 A.2d 1225 (Con. App. Ct. 2000)
(RSUs are divisible as marital property based on time between grant and separation.).
      17   Grasch v. Grasch, 536 S.W.3d 191 (Ky. 2017).
      18   Id. at 192.
      19   Id. at 194-95.

                                           9
dissolution, and the indeterminate value of the asset made it particularly

suitable for delayed division.20 This holding is consistent with prior Kentucky

opinions and many of those in other states regarding unvested assets with

uncertain values.21

      In addressing the appropriate division, Laura argues that the RSUs

themselves represent wages as of the date of the grant, making them entirely

marital property. In support of this proposition she relies on the Court of

Appeals’ affirmation of the trial court in Penner v. Penner.22 In Penner, the trial

court classified the husband’s Humana RSUs as marital property at time of

grant, equally dividing the unvested shares.23 Similarly, in Dotson v. Dotson,

the Court of Appeals affirmed a trial court’s division of the wife’s United Parcel

Service Restricted Performance Units (RPUs) as marital property, holding that

her right to participate in the program accrued during the marriage even

though the value was unvested.24 Laura argues that Scott’s right to participate

      20   Id. at 195.
      21  See McGinnis v. McGinnis, 920 S.W.2d 68 (Ky. App. 1995) (holding nonvested
shares of stock as marital property); Poe v. Poe, 711 S.W.2d 849 (Ky. App. 1986)
(holding nonvested military pension to be marital property); In re Marriage of Short,
890 P.2d 12, 13 (Wash. 1995) (Unvested stock options were part community property
and part separate property.); but see In re Marriage of Miller, 915 P.2d 1314 (Colo.
1996) (Shares of restricted stock granted during marriage constituted marital property
in their entirety.).
      22   411 S.W.3d 775 (Ky. App. 2013).
      23  Id. at 778. (Penner was remanded by the Court of Appeals because in addition
to dividing the interest in the RSUs, the trial court attributed 100% of the value to the
noncustodial parent for purposes of child support and maintenance, finding this to be
“double dipping.”)
     24 523 S.W.3d 441, 445 (Ky. App. 2017). It should be noted that while similar,

RSUs and RPUs have significant technical differences. RPUs are transferred to an

                                             10
was based on his work performance during marriage and was marital property

upon grant. This is directly contrary to Grasch, where we acknowledged that

signing the contingency contract was only the necessary, first step in receiving

the compensation.

      Scott argues the trial court and Court of Appeals were correct in

classifying the RSUs as nonmarital, that they represented a “mere expectancy”

with no value to divide prior to the vesting date. He argues Grasch must be

read consistently with this Court’s opinion in Holman v. Holman.25 In Holman,

the husband was the recipient of a disability pension as the result of an on-

the-job injury as a firefighter.26 This Court held that whether such benefits

were marital or nonmarital was determined by the character of the property

they replaced.27 We held that “income earned, or payments made…to replace

income earned post-divorce are nonmarital.”28 The proper classification of

these types of assets requires a careful case-by-case analysis of the employee

compensation agreement or other agreement granting them. In this case, Scott

argues that the RSUs are nonmarital as income earned after the dissolution of

employee’s account upon grant but must be returned if for any reason they do not
vest. Employees may not trade the shares represented by the RPUs between grant and
vesting but do receive voting rights and dividends during the restricted period. RSUs
are not added to an employee’s account until vesting and the employee receives no
dividend income or voting rights until vested.
      25   84 S.W.3d 903 (Ky. 2002).
      26   Id. at 904.
      27   Id.
      28   Id. at 910.

                                         11
the marriage and therefore not part of the marital estate,29 comparing them to

the debt relief afforded a broker in Cobane v. Cobane.30

      In Cobane, the husband was paid $967,243 as part of a transition

incentive program.31 Attached to the payment were promissory notes

incrementally forgiven over a period of nine years.32 At the time of divorce,

approximately $426,000 of the attached promissory notes remained

outstanding.33 The trial court found that all of the funds already forgiven as

well as 65% of the outstanding balance were marital property.34 The Court of

Appeals reversed, holding that the encumbered funds were “more akin to

unearned future income than an unvested benefit.”35 As such, the prepaid

compensation was nonmarital as to the portion still attached to unforgiven

promissory notes as of the date of the divorce decree.36

      Scott argues that like unforgiven debt in Cobane, he only earns the

income upon the vesting of the RSUs because they are fully subject to forfeit

prior to that point. We do not find this argument persuasive because, under

this reading, one would have to believe that the only performance required to

      29   Sharber v. Sharber, 35 S.W.3d 841, 844-45 (Ky. App. 2001).
      30   544 S.W.3d 672 (Ky. App. 2018).
      31   Id. at 676.
      32   Id.
      33   Id.
      34   Id.
      35   Id. at 678.
      36   Id.

                                             12
earn the RSUs was given on the day of vesting. We find the grant of RSUs to be

more analogous to the contingency fee contract in Grasch than Cobane’s debt

relief. And as we stated in Grasch, assets like the contingency fee contract, or

Scott’s RSUs, may represent both marital and nonmarital property.37 To

appropriately classify such assets, the trial court must first determine whether,

and to what extent, they were granted as compensation for service prior to the

grant versus as an incentive for the employee's future services.38

         Like the contingency fee contract, the RSU grants were contracted for

during the marriage but required Scott’s continued employment for a period of

time before they would be paid out. Also like the contingency fee contract, Scott

would either receive the entire value of the RSUs or nothing. As we stated in

Grasch, assets like the contingency fee contract, or Scott’s RSUs, may

represent both marital and nonmarital property.39 “[T]he consideration critical

to the issue of distribution is the extent to which the anticipated benefits will

have been generated by the mutual effort of the parties.”40

         We decide, as a default rule, that RSUs are “earned” over the period

between grant and vesting.41 This methodology is consistent with KRS 403.190,

         37   536 S.W.3d at 195. See also Dejesus v. Dejesus, 687 N.E.2d 36, 41 (N.Y.
1997).
         38   See Barth H. Goldberg, VALUATION OF DIVORCE ASSETS § 7:8 (Rev. Ed. 2019).
         39   536 S.W.3d at 195. See also Dejesus v. Dejesus, 687 N.E.2d 36, 41 (N.Y.
1997).
         40   Id. at 193.
         This rule is similar to the rule first articulated in the case of In re Marriage of
         41

Nelson, 222 Cal. Rptr. 790 (Cal. Ct. App. 1986). The Nelson test limits the
consideration to the period between grant and vesting, with a corresponding marital

                                              13
in that the proportion of the RSUs “acquired” for purposes of marital

classification is the proportion of time between grant and decree of separation

that is marital.42 This is also consistent with our reasoning in Grasch wherein

we stated, “[w]hile the attorney spouse may put forth work, for the benefit of

the marriage, on the contingent-fee case itself, the non-attorney spouse,

through that spouse's work and efforts elsewhere for the benefit of the

marriage, anticipates receipt of the benefits resulting from the attorney

spouse's work on that case.”43 Parties may overcome the presumption that the

grants represent compensation for employment during the vesting period by

offering contrary evidence. Such evidence may include, but is not limited to,

appropriate plan documents such as Securities and Exchange Commission

filings, plan prospectus, or grant documents.

      Turning to Scott’s Humana Stock Incentive plan, both parties testified

that the RSUs were generally awarded in February of a given year, vesting three

years later. The value of the RSUs was reported as ordinary income on Scott’s

W-2 in the year of vesting and appropriately taxed at that time. Scott testified

allocation calculated by the number of months married during vesting period divided
by the total vesting period. Courts applying the Nelson formula tend to view the
compensation in question as compensation for employment during the vesting period
or as a retention tool by the grantor. Past performance may have made the employee
eligible to receive the grant, but the grant’s purpose was to ensure continued
employment for a reasonable period after the grant.
      42 See Brett R. Turner, EQUITABLE DISTRIBUTION OF PROPERTY § 5:22 (4th Ed.
2019) (Payments received under an employment contract are acquired when the
employee performs the required services for the employer, and not when the contract
is signed.).
      43   536 S.W.3d at 194.

                                         14
that the grants were a means of hiring and retention for Humana. Based on

these facts, we find no reason to disturb our general rule that the RSUs are a

form of deferred compensation representing payment for services over the

three-year vesting period. As such, the marital portion of each RSU allotment

would be the proportion of time in each three-year vesting period that was

marital. However, because the parties did not have the benefit of knowing this

presumption, the parties should be allowed to offer evidence to rebut the

presumption and the proportion in which the RSUs are “earned.” We therefore

reverse and remand for appropriate classification of Scott’s 2013, 2014, and

2015 RSUs consistent with this Opinion.

      We note that appropriate classification as nonmarital or marital property

is only the first step. The trial court must then assign any nonmarital property

to the appropriate party before finally exercising its judgment in equitably

dividing the marital property.44 KRS 403.190 outlines principal factors to be

considered, but the court should include other relevant factors. For instance,

RSUs, unlike plans regulated under the Employee Retirement Income Security

Act (ERISA), may not qualify for division via a Qualified Domestic Relations

Order (QDRO) resulting in adverse tax consequences if immediately divided.45

Deferred compensation arrangements are generally taxed fully to the earning

      44   Sexton v. Sexton, 125 S.W.3d 258, 265 (Ky. 2004).
      45 Brett R. Turner, 18 No. 1 Divorce Litig. 1 (January 2006). See also Atkisson v.
Atkisson, 298 S.W.3d 858, 867 (Ky. App. 2009) (“Trial court should consider the tax
consequences of its division of marital property.”).

                                           15
employee, so any division must consider the tax paid and expenses incurred by

the RSU owner in liquidating the RSUs.46 The RSUs in this case have already

vested so it should be relatively easy for the parties to determine the after-tax

value received, but courts in future cases should consider orders for delayed

division upon vesting due to the uncertain value the RSUs represent.

Accordingly, on remand the trial court must classify the RSUs as marital or

nonmarital, and then equitably divide the marital portion.

B. The Trial Court erred by not considering bonuses and RSUs in its award
of child support.

      Laura contends the trial court abused its discretion by failing to adjust

upward the child support from the top of the statutory guidelines. The review of

an award of child support is for an abuse of discretion.47 Typically a court

calculates the parents' combined monthly adjusted gross income and

determines the appropriate child support obligation amount from the

guidelines table.48 However, the guidelines top out at $15,000 in combined

monthly income; therefore, KRS 403.212(5) provides: “[t]he court may use its

judicial discretion in determining child support in circumstances where

combined adjusted parental gross income exceeds the uppermost levels of the

guideline table.” In the instant case, we have two issues to address. First, did

      46 Charles P. Kindregan, Jr. and Patricia A. Kindregan, Unexercised Stock

Options and Marital Dissolution, Suffolk U.L. Rev. 227, 238 (2001); see also Brett R.
Turner, EQUITABLE DISTRIBUTION OF PROPERTY § 5:22 (4th ed. 2019).
      47McCarty v. Faried, 499 S.W.3d 266, 271 (Ky. 2016) (citing Plattner v. Plattner,
228 S.W.3d 577, 579 (Ky. App. 2007)).
      48   KRS 403.212(2)–(7).

                                          16
the trial court correctly calculate the combined monthly adjusted gross income

at $19,894? And second, if it did, was its decision to set support at $2,199 per

month an abuse of discretion?

      For purposes of child support, income is defined as “actual gross income

of the parent if employed to full capacity or potential income if unemployed or

underemployed.”49 KRS 403.212(2)(b) goes on to state:

      “Gross income” includes income from any source, except as
      excluded in this subsection, and includes but is not limited to
      income from salaries, wages, retirement and pension funds,
      commissions, bonuses, dividends, severance pay, pensions,
      interest, trust income, annuities, capital gains, Social Security
      benefits, workers' compensation benefits, unemployment
      insurance benefits, disability insurance benefits, Supplemental
      Security Income (SSI), gifts, prizes, and alimony or maintenance
      received. Specifically excluded are benefits received from means-
      tested public assistance programs, including but not limited to
      public assistance as defined under Title IV-A of the Federal Social
      Security Act1, and food stamps.

(Emphasis added). The trial court considered only his base salary when setting

Scott’s income as $18,841 per month. Finding that this exceeded the maximum

contained in support guidelines, it then chose to dispense with consideration of

the RSUs given their indeterminate nature.

      In making child support determinations, courts must consider all income

proven by substantial evidence.50 The party seeking to use a different income

level bears the burden of showing that such future earnings will not be

      49   KRS 403.212(2)(a).
      50   Bootes v. Bootes, 470 S.W.3d 351, 355 (Ky. App. 2015).

                                           17
consistent with their recent experience.51 While Layman v. Bohanon, provides

the trial court some allowance for adjusting the parties’ anticipated income,

such adjustments must be supported by evidence.52 Here, Scott testified to a

possible merger between Humana and another healthcare insurance provider

as the only reason to support a deviation. Such testimony was speculative and

even if true, unlikely to alter Scott’s near-term prospects.

      In Penner, a case to which both parties cite, the Court of Appeals

reviewed a similar issue where the trial court decided directly opposite to this

trial court regarding questions of unvested income. The trial court in Penner

divided the unvested equity as marital property and included 100% of the value

in the employee-spouse’s income for purposes of maintenance and support.53

The Court of Appeals said this was “double dipping” on the part of the non-

employee spouse and the trial court abused its discretion by applying the

income in this manner.54 Based on our holding in III(A) above, the RSUs should

have been treated as deferred marital income and said income should have

been added proportionally to each spouses’ gross monthly income in

determining child support. The trial court erred in failing to do so. Had the trial

court calculated the parties’ income properly, their combined monthly income

would have approximately doubled and should have compelled the court to

      51 Layman v. Bohanon, 599 S.W.3d 423, 434 (Ky. 2020) (citing Keplinger v.
Keplinger, 839 S.W.2d 566, 569 (Ky. App. 1992)).
      52   Id.
      53   411 S.W.3d at 781.
      54   Id.

                                         18
adjust upwards from the child support guidelines. We recognize applying the

RSUs in this manner is likely to skew the relative proportion of the monthly

gross income in a way that is not representative of the actual earning power of

the parties, but the trial court has discretion to take this into consideration

when ordering child support.

      In any support determination, KRS 403.211(3) and 403.212(5) give the

court broad discretion when the combined parental gross income exceeds the

upper limit.55 We said in McCarty v. Faried that when setting the support above

the guidelines, the trial court’s determination must be in the best interests of

the child.56 “When making that determination, a trial court may use its judicial

discretion with regard to weighing the factors such as: the needs of the child,

the financial circumstances of the parents, and the reasonable lifestyle the

child may have been accustomed to before or after the parents separated.”57

Child support determinations must be supported by appropriate written

      55  Seeger v. Lanham, 542 S.W.3d 286, 298 (Ky. 2018) (The statutory factors to
be considered are merely representative and not exhaustive.); C.D.G. v. N.J.S., 469
S.W.3d 413, 418 (Ky. 2015) (“[T]he courts of this Commonwealth have repeatedly
stated, trial courts have broad discretion in determining child-support matters.”); see
also McIntosh v. Landrum, 377 S.W.3d 574, 577 (Ky. App. 2012) (“Trial court retains
considerable discretion over the establishment or modification of child support;
however, that discretion is not unlimited, but the Legislature has created general
guidelines and presumptions, which the trial court may only deviate from if it gives
appropriate written reasons.”) (quoting Com. Ex rel. Marshall v. Marshall, 15 S.W.3d
396, 400-01) (Ky. App. 2000); Brown v. Brown, 952 S.W.2d 707 (Ky. App. 1997)
(Courts have flexibility to fashion appropriate child support orders for situation not
addressed by statutory scheme.).
      56   499 S.W.3d 266, 273 (Ky. 2016).
      57   Id.

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reasons based on specific facts and circumstances and not merely on simple

mathematical extrapolation from the guidelines.58 As we have noted, the

combined gross monthly income captures all sources of income available to the

parties including bonuses, RSUs, and maintenance.59 Therefore, it is clear the

RSU income should have been included in the income calculation, and the trial

court erred in not doing so. For this reason, we reverse the trial court’s child

support calculation. On remand the trial court must appropriately allocate the

RSUs to the parties then recompute the child support weighing all the

ordinary, relevant factors addressed in such a support award including “the

reasonable lifestyle the child may have been accustomed to.”60 In doing so, the

court can consider whether its previous order that the parties equally split the

costs of the children’s extracurricular activities is still appropriate.

      Lastly, we note the problematic nature of the current guidelines. The

current income tables are in need of updating by the legislature, both to

capture a greater range of incomes and ensure the support allocations in the

table remain both realistic and appropriate. Until then, it is incumbent upon

the courts to use their discretion in assessing the relevant factors when

addressing incomes not explicitly covered by the table and in deciding on

departures from the guidelines’ recommendations in light of the parties’

circumstances.

      58 Downing, 45 S.W.3d at 457 (reversing lower court’s strict reliance on a linear
extrapolation of support unwarranted by any evidence of actual need).
      59   KRS 403.212(2)(b).
      60   McCarty, 499 S.W.3d at 273; see also KRS 403.211(5).

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C. The trial court did not abuse its discretion in its award of maintenance.

      Laura challenges the maintenance award of $1,500 per month for forty-

eight months. The statutory test for granting maintenance is whether the

spouse is unable to support her own reasonable needs through her property,

including her part of the marital estate, and is also unable to support herself

through suitable employment.61 Once a court deems an award of maintenance

to be proper, the statute directs:

      (2) The maintenance order shall be in such amounts and for such
      periods of time as the court deems just, and after considering all
      relevant factors including:

      (a) The financial resources of the party seeking maintenance,
      including marital property apportioned to him, and his ability to
      meet his needs independently, including the extent to which a
      provision for support of a child living with the party includes a
      sum for that party as custodian;

      (b) The time necessary to acquire sufficient education or training to
      enable the party seeking maintenance to find appropriate
      employment;

      (c) The standard of living established during the marriage;

      (d) The duration of the marriage;

      (e) The age, and the physical and emotional condition of the spouse
      seeking maintenance; and

      (f) The ability of the spouse from whom maintenance is sought to
      meet his needs while meeting those of the spouse seeking
      maintenance.62

      61   KRS 403.200(1).
      62   KRS 403.200(2).

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Under the statute, the trial court’s responsibilities are to make relevant

findings of fact and exercise its discretion in the determination of appropriate

maintenance in light of those facts.63

      Laura proposed a budget identifying her reasonable needs as $9,000 per

month. After review, the Oldham Family Court found her reasonable needs

were actually $6,000 per month. While Laura was not currently employed, the

trial court found she was capable of earning at least $1,733 per month and had

personal property (nonmarital and her share of marital property) valued at

approximately $700,000. The trial court acknowledged that the couple had

lived a relatively lavish lifestyle and been married for twelve years, two of which

were during the pendency of the divorce. The trial court noted that prior to

marriage, Laura had earned a significantly higher salary than the imputed

number, but she would be required to update her educational and licensing

background to resume that level of employment. Based on these facts, she had

a monthly shortfall of $4,267 between her reasonable needs and imputed

income which must be serviced by a combination of maintenance and Laura’s

personal assets.64

      Laura principally relies on our opinion in Powell v. Powell, 107 S.W.3d

222 (Ky. 2003), where we reversed the trial court’s maintenance obligations as

      63   Perrine v. Christine, 833 S.W.2d 825, 826 (Ky. 1992).
      64 It should be noted in the divorce decree, the trial court incorrectly calculated

the shortfall as $3,267 per month. The calculation was corrected in its order regarding
the parties’ motions to alter, amend or vacate. Following the correction, the court did
not adjust the maintenance award.

                                            22
insufficient. In Powell, the couple was married eighteen years with a combined

income of nearly $600,000 annually, entirely from the husband’s neurosurgery

practice.65 The trial court awarded the wife $3,000 per month in maintenance

for three years.66 The wife had proposed a budget establishing her reasonable

needs at $5,400 per month.67 A plurality, writing for the court, remanded the

case in part because the trial court failed to address the gross discrepancy in

incomes between parties and for a lack of analysis as to what the wife’s

reasonable needs were in light of the couple’s standard of living.68 A two-vote

concurrence accepted the wife’s proposed budget as sufficient evidence of

reasonable need, but found the trial court failed to adequately analyze the

wife’s ability to meet that reasonable need independently and remanded for

that reason.69

      Laura postulates that like Powell, the trial court failed to adequately

calculate her reasonable monthly needs. Furthermore, she argues the trial

court never considered that Scott’s income was more than adequate to support

the higher amount of maintenance requested. Finally, she advances that if her

independent assets are to be considered as a source for the shortfall, the trial

      65   Id. at 223-24.
       66 Id. at 223 (The wife had been a registered nurse, and the trial court found

three years to be a reasonable timeframe to allow her to renew her licenses and meet
any new educational requirements.).
      67   Id. at 227.
      68   Id. at 225.
      69   Id. at 227.

                                          23
court must make a specific finding as to the reasonable income imputed to

those assets, seemingly arguing that the principal of the assets is beyond the

court’s consideration.

      Scott relies principally on this Court’s decision in Perrine v. Christine,

where the couple was married for thirty-four years living on the husband’s

annual income of $151,000.70 Upon dissolution, the couple essentially divided

all assets fifty-fifty including numerous investments, property, and the

husband’s deferred compensation and pension benefits totaling approximately

$600,000.71 The trial court found the wife’s reasonable needs were $46,000 per

year and found that the division of marital property was sufficient to meet that

need.72 We held that the trial court was not clearly erroneous in eliminating the

temporary maintenance in light of the assets available to the wife to meet her

needs.73 We stated, “[l]ike anyone else with financial responsibilities and

limitations, [the wife] may decide whether and when liquidation, and what

investment strategy, is in her best interest. The trial court need only decide

whether the party seeking maintenance has available sufficient resources to

meet the conditions of KRS 403.200.”74

      70   833 S.W.2d at 825.
      71   Id. at 826.
      72   Id.
      73   Id. at 827.
      74   Id.

                                        24
      Applying the abuse of discretion standard, we hold the trial court’s

decision was not arbitrary, unreasonable, unfair, or unsupported by legal

principles. The trial court is not required to delineate every factor, but only to

consider the factors in its decision.75 Like the trial court in Perrine, the trial

court here rightly considered Laura’s independent assets, whether as an

income source or through principal liquidation, in determining Laura’s ability

to support herself. Such considerations do not require the court to undertake

the work of an investment advisor, only to make reasonable conclusions based

on the facts presented as to the adequacy of those resources. The trial court

addressed Laura’s inability to immediately return to the job market at her

previous level. Unlike the trial court in Powell, the Oldham Family Court made

specific, if not budget level, findings regarding Laura’s proposed monthly

needs.

      Consideration of the lifestyle to which Laura had become accustomed

during the marriage is captured in KRS 402.200(2)(c) separately from Scott’s

ability to pay. As the Court of Appeals correctly noted, “the trial court is not

required to analyze [Scott’s] income when it calculated [Laura’s] maintenance

payment…only to consider his ability to provide for himself and make the

payments ordered.”76 The ability to pay is not an independent plus factor in the

award of maintenance, unlike the similar provisions in Kentucky’s child

     75 Shafizadeh v. Shafizadeh, 444 S.W.3d 437, 446 (Ky. App. 2012) (citing

McGregor v. McGregor, 334 S.W.3d 113, 118 (Ky. App. 2011)).
       76 Normandin v. Normandin, No. 2016-CA-000392-MR, 2018 WL 2450534, at *4

(Ky. App. June 1, 2018).

                                         25
support statutes. In KRS 403.211(3) and 403.212(5), excess income above

guidelines is an independent factor supporting an upward departure from the

support guidelines. KRS 403.200(2)(f), on the other hand, operates as an equity

check, allowing courts to determine whether the resulting maintenance

calculations based on the reasonable needs of the dependent spouse can be

adequately served by the paying spouse while meeting his or her own needs.

Courts may disagree as to what constitutes the reasonable needs of a lower

wage-earning spouse in high income divorces where the couple maintained an

extravagant lifestyle, but we cannot find the trial court abused its discretion.

For these reasons, we find no abuse of discretion by the trial court and affirm

the Court of Appeals as to maintenance.

D. The issues of classification of the Wyoming property and Scott’s 401k
are not properly before the Court.

      Laura raises two issues in her brief that were not addressed in her

motion for discretionary review: (i) the trial court’s classification of the

Wyoming property; and (ii) the nonmarital allocation of Scott’s 401k. Although

fully briefed, these issues are not properly before the Court pursuant to

Kentucky Rules of Civil Procedure 76.20(3)(d). Consistent with prior holdings,

this Court will not address issues which the Appellant fails to raise in the

Motion for Discretionary Review.77

      77See Indiana Ins. Co. v. Demetre, 527 S.W.3d 12, 41 (Ky. 2017); Wells v.
Commonwealth, 206 S.W.3d 332, 335 (Ky. 2006); Ellison v. R & B Contracting, Inc., 32
S.W.3d 66, 71 (Ky. 2000).

                                         26
                                   IV. CONCLUSION

      In conclusion, we hold that the Oldham Family Court improperly

classified Scott’s restricted stock units and, due to the nature of the restricted

stock units, miscalculated the combined monthly income for purposes of

setting child support. We also hold the Oldham Family Court did not abuse its

discretion by not considering Scott’s income as an independent factor for

increasing the directed maintenance or computing Laura’s reasonable needs.

      For the foregoing reasons, we affirm the Court of Appeals on the question

of maintenance but reverse on the issues of the marital division of the

restricted stock units and resulting child support calculation and remand for

further proceedings consistent with this Opinion.

      Minton, C.J; Hughes, Keller, Lambert, VanMeter and Wright, JJ., sitting.

All concur. Nickell, J., not sitting.

COUNSEL FOR APPELLANT:

Paul Joseph Hershberg
Paul Hershberg Law, PLLC

Louis Paz Winner
Clay Daniel Winner LLC

COUNSEL FOR APPELLEE:

James Daniel Theiss
James L. Theiss
Theiss Law Offices PLLC

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