Trust attorney should have been permitted to tesify; increase in value of nonmairtal business- Ky Court of Appeals

Businessman looking at the time on his wrist watch in car. Business concept.


Both Husband and Wife appealed Court Order entered after a trial on all issues. Wife argued that the family court erred in finding that all of the proceeds from the sale of Husband’s businesses were his nonmarital property. Husband argued the family court erred in determining the character of Wife’s Trust corpus was nonmarital property. Lastly, Wife argued the family court erred in not awarding child support and splitting the children’s expenses equally.

The Court of Appeals first turns to Husband’s business, holding that the family court properly found businesses were Husband’s nonmarital property as they were owned prior to the marriage and any increase in value was not related to joint efforts of the parties. Wife’s contributions as a homemaker, limited to a few months after the children were born, was not enough to demonstrate joint effort.

The Court of Appeals then turns to Husband’s argument that the family court erred by excluding trust attorney’s testimony at trial which resulted in the family court concluding Husband made an inter vivos gift of 1.7 million dollar trust to wife. The Court of Appeals agrees holding that husband met his burden to prove “1) the substance of the excluded evidence; (2) that the family court abused its discretion by excluding it; and (3) that there was a substantial possibility the court would have reached a different verdict if the evidence had not been excluded.” Husband made it clear he was calling attorney to testify as to the creation of the trust for estate planning purposes; the family court abused its discretion by failing to recognize the joint-client exception to attorney-client privilege (KRE 503(d)(5))which would have allowed attorney to testify, and; a third fact witness could have changed the outcome.

The Court of Appeals then turns to Wife’s argument that she should receive child support and the children’s expenses should be split. The family court’s child support decision was based on Wife’s receipt of the 1.7 million dollar trust, so the Court of Appeals orders the Court to revisit this issue on remand, as they vacated and remanded on the trust issue.

Digested by Elizabeth M. Howell

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