Ky Supreme Court Oral Arguments To Be Held June 14, 2007 In Teacher's Retirement Case On Discretionary Review

Shown v. Shown, 2004-CA-000988-MR. Discretionary review granted June 7, 2006; not for publication by operation of CR 76.28(4).
Here's the digest of the Court of Appeals decision:

Issue and Holding:
Whether husband’s entire Kentucky Teacher’s Retirement Account is exempt from division as marital property pursuant to KRS 161.700. The Court held yes, such retirement is exempt.

The husband’s KTRS account was valued at $81,410.27 and the wife’s Fidelity SEP-IRA was valued at $1895.97. The husband argued that his account was exempt pursuant to KRS 161.700. The wife argued that only the portion of his account up to the amount of her IRA was exempt from division as a marital asset, pursuant to KRS 403.190(4). The trial court held that KRS 161.700 controlled and found that the husband’s entire account was exempt. The wife appealed.

This is a case of first impression for Kentucky. There is a conflict between the two statutes. KRS161.700 (2) states that KTRS benefits are exempt from division as marital property in divorce proceedings. Yet, KRS 403.190(4) states that the level of exception provided to the spouse with the greater retirement benefits shall not exceed the amount of exemption provided to the other spouse. Since KRS161.700 (2) is more specific, it controls. Furthermore, two amendments were made to KRS161.700 after the amendment to KRS 403.190 (4), neither of which addressed the conflict herein. The amendments omitted any language permitting attachment for either court-ordered division of marital property or maintenance. The Court found this to be a clear indication of legislative intent. The Court declined to decide whether the result, the husband’s entire account being exempt, was equitable.
In the alternative, the Court held that the wife’s IRA did not qualify as retirement benefits under KRS 403.190(4), as it is not regulated by ERISA, not regulated by state or local government, and not a plan qualified under Section 401(a) of the IRC.
Digest by Sarah Jost Nielsen, Diana L. Skaggs + Associates