## Facts

- Richard P. O’Neill (husband) and Susan Snyder O’Neill (wife) divorced in the Fayette Circuit Court in Kentucky.
- During the marriage, the husband purchased various high-value jewelry items with earnings during the marriage and presented them to the wife on occasions such as birthdays and Christmas.
- The disputed items included a ring appraised at about $35,000 and other jewelry appraised at about $15,900.
- The trial court treated the jewelry as “gifts” to the wife and excluded them from the marital estate when dividing property.
- Evidence showed that, although the husband presented the items as gifts, he also discussed holding the jewelry for appreciation and later sale for the mutual benefit of both spouses.
- The decree also addressed the husband’s future right to deferred compensation, including amounts earned after the parties’ separation.
- The husband appealed portions of the property division, arguing (among other points) that: (1) the jewelry should not have been excluded as nonmarital gifts; (2) the deferred compensation was improperly classified and/or valued; and (3) the trial court failed to account for marital debts when determining the net marital estate.
- The Court of Appeals of Kentucky granted review and considered the proper application of Kentucky’s marital property statute, KRS 403.190, to these assets and liabilities.

## Issues

1. Under KRS 403.190(2)(a), were the jewelry items purchased with marital funds and presented to the wife properly excluded from marital property as “property acquired by gift”?
2. Did the husband’s future right to a deferred compensation account constitute marital property subject to division, and if so, did the trial court err in valuing it without proper present-value treatment?
3. In dividing marital property, did the trial court err by not reducing the marital estate by existing marital debts before distributing assets?

## Decision

- The Court of Appeals held that the trial court erred by excluding the jewelry from the marital estate based solely on labeling it as a “gift,” given the statutory presumption that post-marriage acquisitions are marital property and the surrounding facts suggesting joint economic expectations.
- The court treated the husband’s deferred compensation interest as marital property subject to division, but directed that valuation be handled in a manner that accounts for the future nature of the right (including consideration of present value where appropriate).
- The court agreed that marital debts must be considered as part of the division so that the court allocates a net marital estate rather than distributing assets without accounting for liabilities.
- Disposition: reversed in part and remanded for further proceedings consistent with the court’s interpretation of KRS 403.190 and its instructions on valuation and debt treatment.

## Legal Principles

- Under KRS 403.190, the starting point is that property acquired by either spouse after marriage is presumed to be marital property unless a statutory exception applies.
- The statutory exceptions in KRS 403.190(2)—including the “gift” exception in subsection (2)(a)—operate as carve-outs from the general rule and must be applied based on the facts showing that the exception truly fits.
- Interspousal transfers described as “gifts” are not automatically excluded from marital property; courts examine intent and context, including whether the property functioned as part of the couple’s shared financial planning.
- Property interests that involve future payment or enjoyment, such as deferred compensation rights, may be marital property and must be valued rationally, with attention to time value and contingencies rather than using an undiscoun­ted future figure.
- An equitable division of marital property requires consideration of marital liabilities; courts should account for marital debts to determine the net value available for distribution.

## Conclusion

O’Neill v. O’Neill holds that Kentucky courts begin with a presumption that post-marriage acquisitions are marital property, and that high-value items purchased with marital funds and presented as “gifts” should not be excluded from the marital estate without a fact-based showing that the statutory gift exception applies; it also confirms that deferred compensation rights can be divided as marital property but must be valued appropriately, and that marital debts must be included in determining the net marital estate on remand.


O'Neill v. O'Neill, 600 S.W.2d 493 (1980)