Ensor v. Ensor
2013 Ky. App. LEXIS 112
| Ky. Ct. App. | 2013Background
- Larry and Debbie Ensor married in 1980; substantial family businesses and real estate led to complex estate planning using a Grantor Retained Annuity Trust (GRAT) and a limited partnership (LDF) in 1997–1998.
- Larry conveyed partnership interests in LDF to an irrevocable GRAT in 1998; he received annuity payments (~$2.6M) and the GRAT named Larry’s children as remainder beneficiaries; Debbie executed deeds conveying any dower interest earlier.
- The couple separated in 2003; a limited decree issued in January 2005 reserved property division; parties agreed on a valuation date of December 31, 2004.
- Debbie later alleged she was unaware of the extent/effect of the transfers and sought a marital share of the GRAT; the trial court awarded her an equalization cash payment based on a finding she had a marital interest in the GRAT and denied a fraud finding.
- The trial court issued multiple findings (2008–2010) assigning Debbie roughly $1.5M as an equalization payment tied to the GRAT; both parties appealed and Debbie separately appealed the post-judgment interest rate.
- The appellate court reversed the portion of the judgment treating the GRAT as marital property, remanded for re-division excluding the GRAT, and affirmed the trial court’s reduction of post-judgment interest to 5%.
Issues
| Issue | Larry's Argument | Debbie's Argument | Held |
|---|---|---|---|
| Whether GRAT assets are marital property subject to division | Transfers to GRAT were completed irrevocable gifts pre-separation; GRAT removed assets from marital estate | Assets originated from marital funds; Debbie did not consent to irrevocable removal so marital under source-of-funds rule | Reversed trial court: GRAT properly excluded from marital estate; trial court erred including it (followed Gripshover) |
| Whether fraud/dissipation justified avoiding the GRAT | No fraud; transfers lawful estate planning not in contemplation of divorce | Debbie lacked disclosure/counsel and was kept in the dark, so equitable remedy appropriate | No fraud/dissipation found; trial court’s reliance on non-disclosure insufficient to override Gripshover; no basis to avoid GRAT |
| Whether certain cash/receivables and other assets were mischaracterized or misvalued (e.g., refinancing proceeds, Carroll County parcel) | Challenges valuations and accounting for distributions | Trial court valuations and findings supported by testimony; Debbie supported some findings | Appellate court affirmed trial court on these factual valuations (not clearly erroneous) |
| Proper post-judgment interest rate on equalization payment | Argued lower rate appropriate given equities and court’s prior practice | Sought mandatory 12% statutory rate | Affirmed trial court’s exercise of discretion to award 5% (equities and hearing considered); 12% not mandatory in every dissolution context |
Key Cases Cited
- Gripshover v. Gripshover, 246 S.W.3d 460 (Ky. 2008) (upheld exclusion of irrevocable trust-held partnership interests from marital estate where transfers were valid estate planning)
- Moore v. Asente, 110 S.W.3d 336 (Ky. 2003) (standard of review for factual findings and substantial evidence test)
- Barriger v. Barriger, 514 S.W.2d 114 (Ky. 1974) (fraudulent or dissipative transfers may be avoided when made in contemplation of divorce)
- Cochran v. Cochran, 746 S.W.2d 568 (Ky. Ct. App. 1988) (discusses post-judgment interest in dissolution judgments)
- Sexton v. Sexton, 125 S.W.3d 258 (Ky. 2004) (scope of trial court discretion in equitable division and maintenance issues)