Kentucky Case Law Review by Topic: October 1, 2022 through November 30, 2022

Luna v. Luna, Nos. 20-CI-00267, 2021-CA-0862-MR (Ky. App. 2022)

Marital Property: tax refund

Dated: October 7, 2022
Vacating and Remanding

Wife was awarded primary custody of the parties’ minor child, with Father granted visitations. Notwithstanding Wife’s primary role as caretaker for the child, the trial court ordered that the parties would share equally in the right to claim to claim the minor child (alternating by even and odd years) on their taxes. Wife filed a motion to modify the decree, was denied, and her appeal followed.

Noting that such decisions by a trial court must be made with the minor child’s best interests in mind, and its abuse of discretion standard of review, the Court agreed, vacated the trial court’s denial, and remanded the matter for further review.

Preparations underway to make the world’s largest bourbon slush ahead of Sunday’s AFC Championship Game. (The frozen orange juice concentrate had to be transported by barge.)

We note that father failed to file a brief in this matter. Kentucky Rule of Civil Procedures (“CR”) 76.12(8)(c) provides the following remedies to the Court when a party fails to file a brief: “(i) accept the appellant’s statement of the facts and issues as correct; (ii) reverse the judgement if appellant’s brief reasonably appears to sustain such action; or (iii) regard the appellee’s failure as a confession of error and reverse the judgment without considering the merits of the case” …We will accept the [Wife’s] statement of facts as correct, as supported by the findings of the [trial] court and the record on appeal.

While the Internal Revenue Code provides that the tax exemption should go to the parent with primary physical custody of a minor child, the Court noted that parties can agree to change this scheme as individual circumstances may merit. A trial court may do the same, but must exercise caution when doing so, and ensure such would be in the best interest of the minor child. As the Court could not do the same in this case, it vacated and remanded the matter back to the trial court to revisit the shared tax exemption or better explain its reasoning for continuing the scheme.

Goodwin v. Goodwin, Nos. 20-CI-00073, 2021-CA-0753-MR (Ky. App. 2022)

Attorney Fees
Maintenance: life insurance
Marital Property: survivorship

Dated: November 10, 2022
Affirming
Not to be Published

Following the trial court’s decree in which Wife was awarded $1,500 monthly in maintenance for 60 months, and made Wife the custodial parent, Wife appealed. Wife made three assignments of error, the first of which alleged the trial court abused its discretion with her maintenance award.

Noting Wife’s full employment (albeit with much smaller earnings compared to husband’s), award of the marital equity in the parties’ residence, and other capacity for self-sufficiency, the Court disagreed. The Court further noted the parties’ relatively modest lifestyle prior to the dissolution. While Wife argued the trial court arbitrarily reduced her claimed monthly expenses, she offered little to no evidence to reinforce the amounts she provided. The Court further noted that several of Wife’s claimed expenses appeared to increase throughout the course of the proceedings.

Wife claimed the trial court also erred when it failed to order Husband to name her beneficiary to one or both of his life insurance policies. The trial court had also ordered, however, that maintenance payments to Wife would continue from Husband’s estate, in the event he predeceased her. Though Wife’s share of Husband’s military pension would cease, nothing prevented Wife from taking out her own policy on Husband’s life. Based on this, the Court again affirmed.

In Wife’s third assignment of error, she alleged the trial court erred when it failed to award her attorney fees from Husband. Once again, noting the significant resources apportioned to both parties, the Court disagreed. Wife more than had the capacity to pay for her own attorney’s fees, the Court found.

Smith v. Smith, Nos. 20-CI-00181, 2021-CA-0868-MR, 2021-CA-0906-MR

Maintenance
Marital Property: debts, equitable distribution

Dated: November 10, 2022
Affirming
Not to be Published

As part of the parties’ 2020 divorce, Husband was assigned substantial debts associated with the business he managed, and Wife was not assigned any maintenance award, despite her relatively lower income, in consideration of Husband’s debt obligations. Both parties appealed.

The parties owned and operated businesses including a daycare, grocery, and hardware store, though all of these had been functionally sold to pay off debts at the time of the divorce. Most of this debt ($192,000) was associated with the hardware store. As part of his appeal, Husband argued the trial court erred when it designated this debt as his separate, nonmarital obligation.

“Questions of whether… debt is marital or nonmarital are left to the sound discretion of the trial court[.]” Rice v. Rice, 336 S.W.3d 66, 68 (Ky. 2011). Factors a trial court may consider when determining how to assign a debt include:

(1) Was the debt incurred for the purchase of marital property? (2) Was the debt necessary to maintain and support the family? (3) What was the extent and participation of each party in incurring or benefitting from the debt? And (4) What are the economic circumstances of the parties after divorce to allow for payment of the debt?

Finding that Husband had failed to meet his burden to establish that the business-related debts were marital, the Court rejected his argument and affirmed. Husband failed to provide evidence to bolster his claim, and further failed to reference the record and provide a statement of preservation in his appellate brief.

Wife argued that the trial court erred when it failed to award her maintenance (due to Husband’s debt obligations), because Husband had testified he was considering bankruptcy. This had not happened at the time of the appeal, however, and Court found no abuse of discretion, writing:

The [trial] court found [Husband’s] monthly income to be $3,200.00 and reasonable monthly expenses to be $2,918.00. The $192,000.00 of debt associated with Smith Hardware was allocated to [Husband]. The trial court properly considered [Husband’s] ability to meet his own needs when awarding maintenance. In making its decision, the trial court acknowledged other KRS 403.200(2) factors, including the substantial length of and decent standard of living during the marriage, but noted the parties were "deeply in debt and appear to have lived well beyond their means.” Thus, the trial court placed higher weight on this factor relative to the others. Considering the amount of the debt and [Husband’s] financial resources, we cannot say the trial court abused its discretion in prioritizing this factor and declining to award maintenance.

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