Kentucky Case Law Review by Topic: January 1, 2025 through February 28, 2025

Krallman v. Estate of Krallman, et al., Nos. 17-CI-00316, 2024-CA-0065-MR (Ky. App. 2025)

KRS 403.190: (1)(a) contributions of each spouse
Marital Property: appreciation (home) (stock), burden of proof, debts, dissipation, gift, house, retirement benefits, separate property, source of funds, standard of review, tracing, valuation (home)
Remand
Witness: credibility

Dated: January 16, 2025
Affirming in Part, Reversing in Part, and Remanding
Not to be Published

The parties began dissolution proceedings in 2017, and significant litigation followed. In 2023, the trial court held five hearings from February to July. These hearings yielded limited rulings on marital property, except that the trial court determined that shares in a company owned by Husband’s father were his nonmarital property. In the July hearing, Husband informed the trial court of his terminal cancer diagnosis, and sought a bifurcated decree dissolving the marriage. Shortly thereafter, the trial court entered a decree of dissolution reserving all issues of marital property to be handled at a later date.

From bluegrass to balance sheets.

Husband died in September 2023, and the trial court entered a final order resolving marital property division the following December. Wife appealed and requested the Court substitute Husband’s estate as party to the case (the latter was granted by the Court in a separate order).

In a brief part of its opinion, the Court explains its decision to permit review of Wife’s appeal, despite the Estate’s objections and her failure to cite the record where objections were preserved at the beginning of each of her arguments. Such decision, the Court wrote, is subject to its own discretion. In addition, the Statement of the Case portion of Wife’s brief has citations to the record where objections were made and preserved.

In her first assignment of error, Wife alleged that the trial court erred by entering a bifurcated decree of dissolution before resolving all property and debt issues. The Court disagreed, first noting KRS 22A.020(3)’s prohibition on any review of “that portion of a final judgment, order or decree of a [trial court] dissolving a marriage.” Even if such a review were permitted, the Court likely would have affirmed the decision to bifurcate, owing to inherent trial court discretion in such matters, and consideration of Husband’s prognosis.

[C]onsidering [Husband] had a terminal illness, bifurcating the case to grant a dissolution before entering a final judgment on the property issues was reasonable.

Wife’s next assignment of error concerned the marital residence and the trial court’s award of $50,000 equity therein to Husband as nonmarital property. After the parties married, Husband executed a quitclaim deed retitling the residence to include both parties’ names. Wife argued that this constituted a gift and his waiver of nonmarital interest. This characterization was contradicted, however, by Husband’s testimony during the 2023 proceedings. Noting that “the intent of the purported donor is considered the primary factor” in such determinations, the Court rejected Wife’s argument.

Similarly, the Court affirmed the trial court’s award of $5,000 in nonmarital interest to Husband attributable to improvements he made to the property prior to the marriage. Notwithstanding the lack of documentary evidence to substantiate his claim, the trial court had found his testimony credible. And the amount awarded to Husband was ultimately less than he had requested. Husband’s assertion was further supported by the testimony of an appraiser who appeared at trial, and noted evidence of extensive remodeling consistent with the improvements Husband alleged he made.

As for the valuation of the home, the Court agreed with Wife that the trial court had miscalculated. During the proceedings, Wife had two appraisals performed, both by the same professional: one in 2018 for $175,000 and another in 2022 for $240,000. In reaching $207,500 for the value of the marital residence, the trial court cited a 377% increase in value between the two appraisal amounts, which it deemed unreasonable. This finding, however, was clearly erroneous. Instead, the increase between appraisals was 37%. The Court thus reversed and remanded back to the trial court for a redetermination of the home’s value.

Concerning debt from a home equity line of credit, and Wife’s objection to its allocation to both parties, the Court affirmed the trial court’s decision. While money from this line of credit was primarily spent by Husband after the parties’ separation, the expenditures were marital in nature, including: bills, school tuition, and assistance with Wife’s expenses.

In her next assignment of error, Wife alleged Husband dissipated ~$80,000, based on deposit records for his checking account post-separation. Wife failed, however, to provide any proof that these funds were hidden or misused. Thus, the Court found, there was no evidence that dissipation occurred.

During the parties’ marriage, Husband was awarded ‘Class A’ non-voting stock in a company owned by his father. Husband’s father retained all of the company’s ‘Class B’ stock, that had voting rights only, and no monetary value. Relevant to Wife’s appeal, the agreement controlling these stocks specified that only Husband or his direct descendants were permitted to own the stock. The agreement specifically excluded spouses as shareholders.

Notwithstanding the bifurcation of the trial court’s proceedings, Husband’s nonmarital ownership of the Class A stock was determined following the February 2023 hearing. The trial court also deemed the stock’s increase in value over the term of the marriage as nonmarital, because Husband’s father retained all voting rights and business decisions.

Wife argued the trial court erred in this award, citing to Allison v. Allison, 246 S.W.3d 898 (Ky. App. 2008), wherein the Court found that an increase in stock value in a similar case could be deemed marital, even if the stocks themselves were not. The Court disagreed that these cases were analogous, however, noting that the husband in Allison had contributed to the stock’s increase in his ownership role of the company. In the instant matter, Husband’s father had retained decision-making ability throughout the marriage. In a similar vein, the Court rejected Wife’s argument that the trial court erred in its exclusion of expert testimony related to her contributions to the increase in value as a homemaker:

If the increase in value was not a result of [Husband’s] actions, then [Wife’s] contributions as a homemaker also did not lead to an increase in value… The testimony of the expert was unnecessary.

Wife’s appeal went on to argue that the trial court erred when it awarded Husband all of his Fifth Third Bank and Intel stocks as his nonmarital property. She argued that the stocks were purchased during the marriage, and thus should have been considered marital property. The stocks had been purchased using money from a mutual fund established for Husband by his father, but were purchased in both parties’ names (using funds transferred to a jointly-held account). Noting that there had been no other funds in the joint account while it held money from the mutual fund, and Husband’s testimony he had not intended to gift his nonmarital interest in the stock to Wife, the Court again affirmed.

Finally, the Court again affirmed the trial court’s ruling that only the marital portion of Husband’s 401(k) was divisible. While Husband did not submit records showing the premarital balance, the trial court found that such records could be obtained, and its order dividing the account accordingly was thus reasonable.

Adkins v. Adkins, Nos. 22-CI-00132, 2023-CA-1142-MR (Ky. App. 2025)

Civ. R. 52.01
KRS 403.190: (1)(a) contributions of each spouse
Marital Property: division, equitable distribution, debts, gift, real property, source of funds, unjust enrichment
Witness: credibility, lay

Dated: January 24, 2025
Affirming
Not to be Published

The parties married in April 2022, separated by September 2022, and finalized their dissolution that December. The trial court reserved property issues for later determination and held an evidentiary hearing. It found that Husband had been coercive and erratic throughout the parties’ extremely brief marriage. Wife, a high-earning nurse anesthetist, was deemed to have provided nearly all income during the marriage, while Husband contributed little and frequently solicited funds from Wife for various ventures.

During the marriage, Wife mortgaged and sold her non-marital property and took on an unsecured note to fund an $803,000 purchase of two farms originally owned by Husband’s family. Husband had inherited a 1/6 interest in those farms before the marriage, but the trial court credited him with only $90,000 of the purchase price, finding that his equity had been “absorbed” due to the inflated auction price, which Wife funded almost entirely from her premarital assets. The trial court explicitly rejected Husband’s claim that the farms were a gift, noting a lack of credible evidence of donative intent and Wife’s testimony to the contrary.

The trial court awarded the farms to Wife and assigned her the $592,800 secured debt used to acquire them. A rollback truck and towing business (funded in part by a $20,000 payment from Wife before the marriage) were deemed marital assets and awarded to Husband. To effect an overall division, the trial court offset these assets against Husband’s remaining inheritance. A tractor sold at a loss was also deemed marital property, with Husband ordered to reimburse Wife for half the loss. Other assets, including a recreational vehicle, Skid Steer, shipping containers, and trailer, were found marital and ordered to be sold with proceeds split equally.

In his subsequent appeal, Husband argued that the trial court: (1) erred by adopting Wife’s proposed findings; (2) mischaracterized his non-marital property; (3) erred in finding no donative intent regarding the farms and tractor; and (4) abused its discretion in assigning him the $188,000 debt related to the unsecured note.

In rejecting Husband’s arguments, the Court noted its deference to trial courts’ credibility findings and factual findings of donative intent, as well as the trial court’s discretion in equitably distributing marital property and debt. “[W]e must extend ‘due regard’ to the [trial court’s] unique opportunity to determine witness credibility.”

The trial court, the Court conceded, “did not very clearly state whether the farms were marital property, non-marital property, or a combination…” But this error was harmless based on the Court’s review of the record.

The language of the [trial court’s] conclusions may lead to different interpretations. Perhaps the [trial court’s] conclusions of law could be read as indicating the farms were 89% [Wife’s] non-marital property and 11% [Husband’s] non-marital property. On the other hand, the conclusions of law could also be read as indicating that [Husband’s] prior, inherited non-marital interest in the farms no longer existed – especially as the [trial court] stated his 11% equity was absorbed due to the inflated purchase price. Obviously, the [trial court] viewed the farms as predominantly, if not entirely, [Wife’s] non-marital property.

Notwithstanding Husband’s assertions the farms were his non-marital property by inheritance, he “indisputably did not inherit the entirety of both farms but simply a one-sixth interest in each.” The Court accepted that the farms were effectively Wife’s non-marital property, despite being titled jointly, and agreed that her $1 million in losses justified the trial court’s assignments. Thus, in adopting Wife’s proposed findings while making its own independent findings, the trial court did not commit reversible error.

Finally, the Court rejected Husband’s argument that the trial court abused its discretion by assigning him $188,000 in marital debt. The debt was incurred during the marriage and used toward the farm purchases, and was jointly signed by the parties. Further, Wife had assumed the much larger $592,800 secured (by her nonmarital property) debt. In equitably dividing the parties’ property and debts, the trial court also relied on Wife’s testimony and its finding that Husband’s actions contributed to her financial exposure. The Court thus affirmed, finding no abuse of discretion by the trial court.

Hester v. Hester, Nos. 02-CI-502816, 2024-CA-0484-MR (Ky. App. 2025)

KRS 403.090: statute of limitations
Marital Property: appreciation (stock), division, equalization
Property Settlement Agreement

Dated: February 7, 2025
Affirming
Not to be Published

During the parties’ marriage, in 2000, they purchased 1,500 shares of preferred stock in a digital media company. The parties held their respective shares separately and in their individual names, with Wife holding 500 and Husband 1,000. Later that year, the digital media company offered conversions from preferred to non-preferred shares at a 1.3-to-1 ratio, trading off 10% annual dividends for a 30% increase in ownership. Husband elected to convert; Wife did not. As a result, Husband’s ownership interest grew to 1,300 non-preferred shares.

Husband filed for dissolution in 2002, and the parties entered into a property settlement agreement that was incorporated into their 2005 decree. In accordance with the agreement, Wife received 25% of Husband’s non-preferred shares.

In 2021, Wife filed a motion seeking $38,096 for what she alleged was an unequal division of the digital media company shares (Wife’s claim appears to have been triggered by her receipt of an equity table from the company following her sale of some shares, and was amended after first seeking a lesser amount). She also sought to hold Husband in contempt, and an award of attorney fees. As a result of the parties’ agreement, she had received 825 total shares relative to Husband’s 975.

Husband filed a motion for summary judgment and dismissal of Wife’s claim, arguing that her motion was untimely and fell outside the 15-year statute of limitations under KRS 413.090(1). The trial court agreed and found that Wife’s claims were barred. Her appeal followed.

Wife’s appeal included several assignments of error; this summary concerns her argument that the trial court misapplied the statute of limitations when it dismissed her motion for recovery. She argued that the trial court erred in holding that her 2021 motion was barred by KRS 413.090(1) and the 15-year statute of limitations for enforcing judgments. To support this, she claimed that: Kentucky’s domestic relations statutes do not specify a limitations period for enforcement of property divisions; and the 15-year period should have started on 12/31/2013, when she alleged she received her last preferred shares dividend payment.

The Court disagreed, noting that the dividend payments were not “executions” of the 2005 judgment. Rather, the last execution occurred in 2005, when Husband’s non-preferred shares were formally transferred to Wife.

Per KRS 413.090, the 15-year period for filing an action on a judgment or decree commences on “the date of the last execution thereon[.]” The decree of dissolution, which incorporated the Agreement, was entered on March 3, 2005. This is the date upon which [Husband] argues the statutory period must begin to run…

Citing Wade v. Poma Glass, 394 S.W.3d 886 (Ky. 2012), the Court wrote that an execution under KRS 413.090 must involve a legal enforcement action, and not merely payments or internal records. Wife’s motion was filed in 2021, more than 15 years after the 2005 execution; thus, the Court found no error, and affirmed.

Miller v. Reid, Nos. 22-CI-01504, 2024-CA-0395-MR (Ky. App. 2025)

Civ. R. 52.01: conclusions of law, findings of fact
KRS 403.190: (1)(a) contributions of each spouse, maintenance
Marital Property: burden of proof, debts, dissipation, remand, valuation
Witness

Dated: February 28, 2025
Affirming in Part, Vacating in Part, and Remanding
Not to be Published

The parties married in 2016, and in 2022, Husband filed for dissolution of the marriage. Prior to the first scheduled trial date, Husband sought and was granted a continuance to allow more time for discovery related to Wife’s ownership interest in the OB/GYN practice in which she worked. Husband subsequently sought another continuance, this time to obtain an expert’s opinion as to the valuation of the practice, which was denied.

In the subsequent decree, the trial court assigned nonmarital property to both parties, and divided marital property and debt between them. The trial court did not, however, assign a value to Wife’s ownership interest in the OB/GYN practice. The trial court declined to award Husband maintenance, nor financial assistance from Wife for his attorney fees. Husband filed a motion to alter, amend, or vacate the trial court’s findings of fact, which was granted in part: the trial court ordered that 2022 and 2023 tax refunds and bonuses be equally divided, and struck Wife’s therapist’s statements from the record as hearsay. Still, no valuation was assigned to Wife’s business interest.

In his appeal, Husband argued that the trial court failed to value Wife’s business interest and to make adequate findings of fact. Noting its question of law standard of review, the Court agreed: this omission by the trial court constituted reversible error. Citing Gaskill v. Robbins, 282 S.W.3d 306 (Ky. 2009), the Court wrote that—while such valuations can be speculative—a trial court must determine the value of a business interest established during the marriage, when it constitutes marital property. The Court thus remanded the matter back to the trial court for further findings of fact and valuation of Wife’s business interest.

The Court also instructed the trial court to reconsider attorney’s fees after completing the valuation, noting that a fee award may depend on final determinations of the parties’ resources. However, the Court did not find the prior denial of fees to be an abuse of discretion.

Husband’s appeal also argued that funds in savings accounts for the parties’ nieces, opened by Wife before the marriage and contributed to during the marriage, were marital property subject to division by the trial court. Husband alleged dissipation, arguing that Wife’s deposits after their separation were intended to deprive him of marital property. But, the Court found, he presented little evidence for this claim, and would have been fully aware of the accounts and Wife’s ongoing contributions to them. Nor did Wife’s post-separation expenditures evince any intent to deprive Husband of his share of marital assets, the Court found.

Husband further challenged the allocation of Wife’s bonus income, arguing that the amounts included in the division of the parties’ bank accounts had not been adjusted to reflect the amount of the bonuses which were already spent by Wife following the parties’ separation. Noting similarities between this argument and Husband’s dissipation claims, as well as the trial court’s “best position” to judge witness credibility, the Court again affirmed.

In his last assignment of error, Husband asserted the trial court erred in its decision to assign him $16,819 in credit card debt.

[U]nlike the acquisition of assets, there is no presumption that debts incurred during the marriage are marital… [T]he party claiming that a debt is marital has the burden of proof. In making this determination, the family court considers: the receipt of benefits derived from the debt; the extent of each party’s participation; whether the debt was incurred to purchase assets designated as marital property; whether the debt was necessary to provide for the maintenance and support of the family; and any economic circumstances bearing on the parties’ respective abilities to assume the indebtedness. Maclean v. Middleton, 419 S.W.3d 755, 773 (Ky. App. 2014) (citations omitted).

Noting a substantial withdrawal by Husband from the parties’ joint account, and Wife’s post-separation financial support—including payment of his mortgage, insurance, and other bills—the Court found no abuse of discretion in the allocation of debt by the trial court.

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