Kentucky Case Law Review by Topic: November 1, 2024 through December 31, 2024

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Thompson v. Thompson, Nos. 22-CI-00539, 2023-CA-0846-MR (Ky. App. 2024)

KRS 403.190(3)
Marital Property: burden of proof, gift, house, separate property (residence)
Witness: credibility

Dated: November 1, 2024
Affirming
Not to be Published

As part of the parties’ 2023 dissolution proceedings, they were each awarded half equity in their marital home, amounting to $171,509 overall. During proceedings, Husband offered his own testimony and his father’s, in support of his claim to $88,464 in equity, which he asserted he received as a non-marital gift from his father. Husband’s father owned a construction company where Husband was also employed, and both men alleged that this company built the parties’ home without charging a standard 15% overhead fee. He argued this waiver constituted a non-marital gift, traceable in the home’s equity at the time of the hearing. Noting the paucity of evidence provided by Husband to support this claim, and the burden of proof on parties claiming a non-marital gift, the trial court disagreed.

“In Kentucky, all property acquired by either party during the marriage is presumed to be marital property. KRS 403.190(3).” Allison v. Allison, 246 S.W.3d 898, 904 (Ky. App. 2008). Gifts are one exception. KRS 403.190(2)(b).

Husband failed to detail specific costs incurred during the construction, nor did he provide documentary evidence supporting the claimed waiver of the overhead fee. Wife was likewise unaware of any such arrangement. And neither party reported the gift to the IRS. The trial court further found Husband’s claim was undermined by his withdrawal of funds (roughly half of the overall equity) to ‘buy’ Wife out at the beginning of proceedings. “Even [Husband’s] testimony leads the [trial court] to believe that this was an after-the-fact issue inserted by [Husband’s] father when the parties began divorce proceedings as opposed to a gift intended for [Husband] only.”

Husband appealed, arguing that the trial court erred in its division of the home equity. Noting Husband’s failure to give clear evidence of a gift, absent which the presumption of marital property applies, the Court disagreed. Husband failed to prove that the construction discount was a non-marital gift. The trial court’s finding that the equity was marital property was supported by the evidence and thus affirmed.

Ellison v. Ellison, Nos. 21-CI-01554, 2023-CA-1136-MR (Ky. App. 2024)

Civ. R. 54.02: (final and appealable)
Civ. R. 60.02
Marital Property: division, separate property, tracing, unjust enrichment
QDRO: conformity with decree, gains or loss

Dated: November 28, 2024
Dismissing
Not to be Published

After a relatively short marriage, the parties’ marriage was dissolved in 2022. As part of the proceedings, Wife was awarded half of the ‘marital interest’ in Husband’s 401(k) account. A QDRO was subsequently entered, though Husband disputed that the QDRO correctly implemented the parties’ agreement.

Editor’s Note: Disputes like this often arise from vague or incomplete language about what portion of a defined contribution account is marital. If your goal is to divide only the marital share—and its market gains—you must say so clearly in the decree, either with a precise formula or a defined dollar amount. Otherwise, you're inviting confusion, conflict, and costly post-decree litigation. In many cases, proper ‘tracing’ is essential. Visit our “Tracing – What to Expect” page to learn more.

Husband filed a motion to set aside the QDRO, and following evidentiary hearings in 2023, the trial court agreed, finding that the QDRO did not comport with the parties’ agreement and created a windfall to Wife. The trial court set aside the QDRO under Civ. R. 60.01, despite Husband's motion being filed under Civ. R. 60.02 (reasoning that the order contained correctable errors), and ordered the parties to retain an expert to calculate their respective interests in Husband’s 401(k), taking into account Husband’s pre-marital interest and gains thereon throughout the marriage.

The trial court further ordered Wife to reimburse Husband for half of the difference between her final assignment and the overpayment amount, citing unjust enrichment.

Wife moved to amend, and then vacate, the trial court’s order, but was overruled. Her appeal followed, wherein she argued that the trial court erred in finding that she was liable for the overpayment, and in its related order that she repay Husband in excess of said overpayment.

Finding it lacked jurisdiction to review the trial court’s interlocutory order, however, the Court dismissed Wife’s appeal. The Court held that the trial court had not fully adjudicated the matter, and thus the trial court’s repayment order was neither final nor appealable.

Dall v. Dall, Nos. 20-CI-500458, 2024-CA-0003-MR (Ky. App. 2024)

Attorney Fees
KRS 403.190(2): statutory factors
Marital Property: appreciation, coverture, equitable division, separate property, stock (PSUs)
Remand

Dated: December 13, 2024
Affirming in Part, Reversing in Part, and Remanding
Not to be Published

Husband and Wife married in 1984 and acquired substantial marital assets, valued at approximately $19 million at the time of trial. Wife, the primary earner, had a career in finance and served as Chief Financial Officer. Husband, who previously worked as a chemist and in environmental safety, left the workforce in 2002 to care for their home and children. The parties separated in 2020, and began dissolution proceedings shortly thereafter.

As part of the dissolution, the trial court divided the parties’ property and interests equally, including Wife’s post-separation earnings, and awarded Husband spousal maintenance of $15,000 per month. The trial court also ordered Wife to pay $110,627.99 in Husband’s attorney’s fees. Wife's appeal followed, in which she challenged the equal division of marital property, the classification of her Performance Stock Units (PSUs), the trial court’s failure to deduct an advance payment made to Husband, the award of duplicative attorney’s fees, and the spousal maintenance award.

The Court upheld the trial court’s equal division of the marital estate, rejecting Wife’s argument that her post-separation earnings should be excluded. Under KRS 403.190, all property acquired after marriage is presumed marital unless an exception applies. In cases where parties have a decree of legal separation, property acquired thereafter may be excluded, but in this case, Wife’s income remained marital. The Court found that the trial court properly considered statutory factors, including Husband’s career sacrifices, in deeming an equal division equitable. The Court thus could not find that the trial court committed an abuse of discretion.

In her appeal, Wife next claimed that the trial court erred when it failed in its marital/non-marital characterization of her PSUs, awarded to her by her current employer. These units, awarded as part of Wife’s compensation package, vested over a multi-year period. The Court emphasized that under Normandin v. Normandin, stock-based compensation must be apportioned based on the time frame in which it was earned. The trial court failed to apply the required time-based proration, instead classifying all PSUs as marital property. The Court deemed this an abuse of discretion and remanded for further findings on when each PSU grant was awarded, when it vested, and what portion of the vesting period was marital.

In her third assignment of error, Wife alleged that the trial court erred when it failed to discount Husband’s retained share for the $133,135 advance payment he received from a joint account during the proceedings. In awarding this payment, the trial court stated that the amount would be deducted from his final share of the marital property. However, the trial court failed to account for this deduction in its final order. The Court found that, while the overall estate was large, the failure to provide specific findings explaining why the advance was ignored required reversal. On remand, the trial court must either properly account for the advance or justify its exclusion.

Additionally, Wife challenged the trial court’s order requiring her to pay $110,628 in attorney’s fees, arguing that at least $50,000 of the amount was duplicative. The Court partially agreed. While it upheld the decision to award fees due to the disparity in financial resources, it found that the record supported Wife’s claim of overpayment. Husband had already received $50,000 in legal fee advances, and the final order did not account for this. The Court reversed and remanded for recalculation, emphasizing that attorney’s fees are meant to compensate counsel, not serve as an indirect means for a party to receive additional marital funds.

Finally, The Court upheld the trial court’s maintenance award of $15,000 per month until Wife turns 65 or retires. Under KRS 403.200, maintenance is appropriate where a spouse lacks sufficient property to meet their reasonable needs and is unable to support themselves through employment. The trial court found that although Husband was capable of working, he left the workforce in 2002, making it unlikely he could reenter at a comparable level. The Court thus found no abuse of discretion in its final determination.

Blog Posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. Please consult with counsel of your choice regarding any specific questions you may have.