Heskett v. Heskett (Ky) Settlement Agreements, Marital/Nonmarital Property, Dissipation

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Heskett v. Heskett, ___S.W.3d___(Ky. App. 2008)

Wife appealed TC’s decision arguing that the court failed to restore her non-marital property. CA reversed and remanded, on a separate issue. CA opined that the TC was correct the property was marital but the TC erred because it failed to consider the issue of dissipation.
Husband and Wife separated in 2002. They drafted a settlement agreement but never signed the agreement. They did, however, divided the property and then began a physical separation. After several months of separation the couple reconciled and bought a house. As a down payment on the house Wife withdrew over $60,000 from CD’s purchased with her share of the previous property division. Husband contributed $8,500 to the purchase of the house from his portion of the property division. Again, however, the couple separated and Wife filed for divorce.
At the conclusion of trial the TC ordered Wife to pay Husband an equal share of the equity in the martial residence. Wife appealed and argued that the settlement agreement from the previous separation should control the classification and distribution of property. Therefore, she argued the money she used as a down payment on the house was her non-marital money and should be restored to her. CA opined that the TC was correct in its determination that the money was marital. CA reasoned that while the parties drafted an agreement during the first separation they never signed the agreement. Therefore, the agreement was not valid under KRS 403.180. Furthermore, when the couple reconciled the previous agreement was voided and not revived by the second separation. However, the CA went on to say that the TC erred because it did not consider the issue of dissipation.
At trial, Wife presented extensive evidence tracing her share of the assets received as a result the first separation. Husband, however, introduce virtually no evidence tracing his share of the assets. In fact, the trial court noted that it was unclear what Husband had done with his share. However, the TC divided the couple’s assets equally. The CA opined that, in the instant case, an equal distribution was not a just distribution. Husband’s inability to account for the majority of his share of the assets received during the first separation constituted dissipation of the marital estate. Therefore, Wife was entitled to have the money she used as a down payment on the marital residence restored to her. Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates