Divisibility of Disability Pension Later Reclassified as Ordinary Retirement Pension, Attorney’s Fees, Bailey v. Bailey, Case Digest, Ky Court of Appeals by Diana Skaggs and Associates

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Divisibility of Disability Pension Later Reclassified as Ordinary Retirement Pension, Attorney’s Fees, Bailey v. Bailey, Case Digest, Ky Court of Appeals by Diana Skaggs and Associates

Buddy Lee Bailey v. Linda Beth Bailey, No. 2012-CA-000508-MR

Published: Affirming

County: Spencer

Facts

Husband filed for dissolution of the parties’ thirty year marriage in 2004. During his employment, Husband actively participated in his employer’s retirement pension plan. Subsequent to the parties’ separation, Husband was injured and filed for short term disability. The order entered by the Court after mediation included a provision that Husband was to provide to Wife information concerning the retirement account, including the policy, and all information regarding Husband’s disability. Wife was not provided with this information. The trial court entered a limited decree of dissolution in December 2004. In August 2006, the Court entered a judgment against Wife for the value of Husband’s personal property not returned to him. Husband filed a motion in June 2008 to satisfy the judgment. Since the pension issue had not been resolved, the Court also granted Wife’s request that the parties exchange all documents relating to retirement or disability accounts.

In June 2011, the Court entered an order holding that Husband’s retirement pension was not subject to division as marital property because Husband’s retirement pension was converted into a disability pension. Wife filed a motion to alter, amend or vacate the order because she was never provided with the retirement policy documents. Husband was deposed, and Wife received the documents. In January 2012, the Court granted Wife’s motion to alter, amend or vacate the judgment, holding that Wife was entitled to entry of a Qualified Domestic Relations Order allocating one half of the pension benefits accrued from the date of marriage to the date of the entry of the limited decree of dissolution. The court found that Husband’s disability pension would be converted to an ordinary retirement pension when Husband reached the age of 62. Wife was also ordered to satisfy the August 2006 judgment against her, plus statutory interest. Husband filed a motion to alter, amend or vacate the Court’s January 2012 order. The Court denied Husband’s motion after a hearing, and Husband appealed.

Analysis

When the Court ruled on the divisibility of the retirement plan, the relevant plan documents had not been made available to Wife or the Court. Because a full and candid disclosure of the parties’ assets is necessary for an equitable division of property, the Court did not abuse its discretion in granting Wife’s motion. Once obtained, the policy clearly stated that when Husband turned 62 his disability pension would end, and he would become eligible for a normal retirement pension. The Court of Appeals distinguished this case factually from the Kentucky Supreme Court’s decision in Holman v. Holman, 84 S.W.3d 903 (Ky. 2002), which held that disability benefits which replace future income should not be classified as marital property. Husband’s disability benefits would be reclassified on a date certain, which was different from the facts presented in Holman. The ordinary pension benefits that were accumulated during the marriage that would be reclassified as normal pension funds when Husband turned 62 were marital property. Any other conclusion would be inequitable because it could allow a spouse to prevent the other spouse from his or her share of retirement benefits through an election of disability coverage.

On the attorney’s fees issue, Husband argued that the Court failed to rule on the motion. Wife argued that the Court’s silence on the matter was a denial of attorney’s fees. The Court of Appeals agreed with Wife, stating that attorney’s fees are entirely within the discretion of the trial court, and the Court in this case clearly considered the financial resources of both parties throughout the lengthy proceedings. Nothing in the record could demonstrate that the Court abused its discretion in failing to award attorney’s fees.

Affirmed.

Digested by: McKenzie Cantrell, Attorney, of counsel, Diana L. Skaggs + Associates

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