CLAYTON, JUDGE.
This matter comes before us on a second appeal after a panel of our Court remanded this case to the Oldham Circuit Court, Family Division, for further proceedings. Based upon the following, we affirm in part, reverse in part, and remand to the trial court.
On June 30, 2010, the trial court conducted a bench trial on the Appellee, Christopher Schell's, petition for dissolution of his marriage to Appellant, Tina Schell. The only issues before the trial court were to assign the marital property and set child support for the parties' son, Garrett.
At the original trial, there was evidence that Tina had suffered a back injury during the marriage as a result of an automobile accident. Tina had surgery for the injury and has since been unable to work due to the injuries. She filed a negligence action against the driver of the vehicle at fault, in which Christopher also asserted a claim of loss of consortium. The suit ended in a settlement wherein Tina received a lump sum payment in the amount of $80,000.00 and an annuity payment in the amount of $1,806.79 per month, payable to the couple jointly.
In January 2009, Tina received a lump sum from the Social Security Administration ("SSA") in the amount of $41,438.00 for the period from August 2006 through December 2008, since it had adjudged that she was disabled as of February 21, 2006. As a result of this judgment, Tina also receives monthly Social Security disability payments in the sum of $1,655.00.
In February of 2009, the SSA also adjudged that Garrett was entitled to benefits due to Tina's disability and awarded him a lump sum in the amount of $24,528.00 for the period from August 2006 through December 2008. Garrett also receives a monthly Social Security disability payment in the amount of $876.00. Garrett's lump sum Social Security award and two monthly Social Security payments were deposited into a custodial account, to which Christopher was designated as sole custodian. Other monetary gifts made to the child throughout the parties' marriage were also deposited into this account.
It was determined by the trial court that, at the time Christopher vacated the marital residence in May of 2009, the balance of the custodial account was $29,938.43. Christopher withdrew $27,400.00 from the account to pay his attorney fees in the dissolution action as well as various expenses. At the time of original trial, the balance of the custodial account was $1,444.78.
Tina and Christopher shared joint custody of Garrett with Tina designated as primary residential parent. At the time of trial, Christopher had not paid any child support to Tina, but was paying $96.00 per month to maintain Garrett's health insurance coverage.
Following the trial, the trial court determined that the $80,000.00 lump sum settlement payment to Tina and the $1,806.79 monthly annuity payment were Tina's non-marital property. The trial court reasoned that, since Tina was unable to work as a result of her injury, the $1,806.79 monthly annuity payment comprised a portion of her income. The trial court also ordered that Tina was entitled to receive all remaining monthly annuity payments and directed Christopher to endorse to Tina any and all annuity payments received subsequent to the date of the decree.
The trial court also determined that Tina's lump sum disability award, as well as her monthly Social Security disability payments, were her non-marital property. The trial court held that Garrett's lump sum Social Security award, as well as his monthly Social Security payments, were his property. The trial court ordered Christopher to reimburse the custodial account in the amount of $27,400.00, which he removed as custodian of the account, and directed Tina to assume the custodial role.
The trial court also ordered Christopher to continue providing health insurance coverage for Garrett and set his monthly child support obligation at $449.80. This amount was based on the income of the parties and was in accordance with the Child Support Guidelines. The court set Tina's monthly child support obligation at $415.20, holding that she was entitled to offset the amount of Garrett's monthly Social Security payments against her monthly child support obligation. The trial court reasoned that, since Tina was the disabled parent and the child's receipt of $876.00 per month in Social Security payments was due to her disability, she was entitled to the credit. The trial court also held that Christopher was allowed to claim Garrett as a dependent on his federal and state income taxes beginning calendar year 2011 and forward, as long as he was current on child support.
Both Tina and Christopher filed motions to alter, amend, or vacate the original Findings of Fact and Conclusions of Law, which the trial court granted in part and denied in part by order entered July 19, 2011. The trial court amended its award of child support to order that no child support was payable from Christopher to Tina on the basis that Christopher, as well as Tina, was entitled to a credit against the child support obligation because of the child's receipt of monthly Social Security disability payments. Tina then filed an appeal with a panel of our Court.
In her first appeal, Tina claimed that the trial court erred by granting Christopher a credit against his monthly child support obligation due to Garrett's monthly Social Security payments. Our Court agreed with Tina's argument, holding as follows:
Schell v. Schell, 2013WL1163882 (Ky.App.2013)(2011-CA-001386-MR), at *2-*3. (Citations omitted).
In the present case, only Tina is entitled to a credit against her monthly child support obligation as a result of the child's receipt of monthly Social Security payments. Thus, the family court erred by granting Christopher a similar credit. On remand, the court is directed to reinstate Christopher's monthly child support obligation as set forth in the court's November 16, 2010, order, retroactive to the date thereof. Id.
Tina also argued before our Court that the trial court erred by failing to enter a common law judgment against Christopher in the amount of $27,400.00 with respect to sums he was ordered to repay to the custodial account, and by failing to impose pre-judgment and post-judgment interest on the amount due. The Court agreed, in part, holding as follows:
Id. at p. *3.
Tina's next argument during her first appeal was that the trial court erred by failing to order Christopher to repay her $17,000.00 relative to her non-marital interest in the Mustang it awarded to him. She argued that, despite the trial court's finding that she expended a significant portion of her Social Security benefits for the purpose of paying off the lease on the Mustang, the court awarded Christopher the Mustang free and clear of any claim by her. The Court agreed with Tina that the trial court failed to resolve this issue, and directed it do so on remand.
Tina's final argument during her first appeal was that the trial court erred by failing to determine the parties' rights with respect to the federal income tax dependency exemption for 2010, and by granting Christopher the right to claim such exemption for any year in which Tina was the primary residential custodian. The Court agreed, in part, holding as follows:
Id. at p. *3. The case was then returned to the Oldham Circuit Court for additional proceedings. The trial court entered an order regarding our Court's determination that Christopher was not entitled to a credit against his ratable portion of the underlying child support obligation which was attributable to monthly derivative Social Security benefits received by the parties' minor child. The trial court's original order quantified $449.80 as the amount of Christopher's monthly child support obligation. The new order entered a judgment against Christopher in the amount of $5,207.40 as an arrearage calculated from November 16, 2010, through July 31, 2013. The trial court explained that this amount was "[a]djusted by Ms. Schell's receipt of $876.00 per month received on behalf of Garrett while the child was in Mr. Schell's primary custody." Judgment of Child Support Arrearage, 8/19/2013 at p. 2.
In an Order dated December 5, 2013, the trial court reaffirmed and made permanent its temporary order of August 16, 2013, in which it granted joint custody of Garrett with Christopher being primary residential parent. The trial court also designated Christopher as Garrett's Social Security disability payee. This payment was to be in lieu of child support paid by Tina. The trial court also ordered Tina to fully answer all interrogation and comply with discovery. The trial court ordered that any amounts of SSI would offset the $5,207.40 arrearage owed by Christopher and that, in lieu of child support from Tina, Christopher would receive Garrett's direct SSI. The trial court reaffirmed its August 19, 2013 Order granting Christopher a credit against his calculated child support arrearage since Garrett was in his care. Finally, the trial court awarded Christopher the 2010 tax dependency exemption.
Tina then filed this appeal.
Kentucky Rules of Civil Procedure (CR) 52.01 provides that "[f]indings of fact, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." A judgment is not "clearly erroneous" if it is "supported by substantial evidence." Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998). Substantial evidence is "evidence of substance and relevant consequence having the fitness to induce conviction in the minds of reasonable men." Id. Kentucky State Racing Comm'n v. Fuller, 481 S.W.2d 298, 308 (Ky. 1972).
Tina first asserts that the trial court erred in granting Christopher a credit against the child support arrearage determined by the Kentucky Court of Appeals' March 22, 2012 Opinion. She argues that the credit was, in essence, a retroactive modification of his child support obligation. Tina contends that, pursuant to Price v. Price, 912 S.W.2d 44, 46 (Ky. 1995), and KRS 403.213(1), the trial court may not address matters concerning child support obligations on a prospective basis.
Christopher, however, asserts that KRS 403.213 allows child support to be modified retroactively upon the filing of a motion. Thus, Christopher argues that the trial court used proper discretion in awarding a "credit" to him and reassigning the child support obligation to Tina during periods of time when a motion was pending before the court and when Garrett was residing with Christopher.
Pursuant to KRS 403.211(15), only Tina is allowed a credit for child support due to Garrett's Social Security payment. KRS 403.213 provides that "[t]he provisions of any decree respecting child support may be modified only as to installments accruing subsequent to the filing of the motion for modification and only upon a showing of a material change in circumstances that is substantial and continuing." See also Price, supra. Christopher filed his motion for a "credit" of child support on July 26, 2013. Any modification of child support could only begin with that date and could not apply retroactively. Given the change in the primary residence of Garrett and other issues with his school, the trial court could modify the child support payments subsequent to the filing of the motion, but erred in modifying them prior to the filing. While the Dissent argues that Christopher first filed his modification motion on September 21, 2011, that motion was for a change in the timesharing and, should such occur, a change in who received Garrett's Social Security benefits. In its order of December 5, 2013, the trial court made its order of August 16, 2013, permanent thereby designating Christopher as the primary residential parent and allowing him to receive Garrett's benefits. Thus, we reverse the decision of the trial court on this issue and remand this case for a new order of modification of child support.
Tina next contends that the trial court erred in designating Christopher as the representative payee of the derivative Social Security benefits received by the parties' minor son. Tina argues that the trial court's prior finding that Christopher had breached his fiduciary duty when he withdrew over $27, 000.00 from his son's account must show that Christopher should not now be trusted to use the derivative Social Security benefits on Garrett's behalf.
The trial court does not have the authority to change the representative payee of Social Security Administration benefits. See 20 C.F.R. § 404.2041 and 20 C.F.R. § 404.2060. The trial court may, however, direct Tina to file paperwork with the Social Security office to change the representative payee to Christopher, comply with all Social Security regulations regarding the transfer of the funds to the new payee and any required accounting. Given Christopher's prior use of the funds in Garrett's account for his own purposes, it would be in error for the trial court not to establish a method of accounting by Christopher for any funds withdrawn from this account. Thus, on remand, the trial court should establish some means of accounting whereby it may be determined that the funds are only going to benefit the child and not Christopher. If Social Security does not approve Christopher as the representative payee, the parties should both comply with all Social Security requirements and notify the trial court and seek further direction.
Tina next argues that the trial court erred in determining that she was obligated to account to Christopher concerning her use of the derivative Social Security benefits received by Garrett. Social Security regulations require a report regarding Tina's use of the funds. See 20 C.F.R. § 404.2035 and 20 C.F.R. § 404.2065. Discovery directed by the trial court should be complied with by the parties. We find no reason to allow Tina to avoid an order of discovery without some compelling reason since discovery may allow any misuse of funds to be found. See 42 U.S.C. 405(j)(3)(A)(D) and 20 C.F.R. 404.2041. Thus, we affirm the decision of the trial court on this issue.
Tina's final argument is that the trial court erred in erroneously awarding Christopher the 2010 federal income tax dependency deduction contrary to the requirements of the Internal Revenue Code since he was not the primary custodian of Garrett and Tina had not executed a waiver. While the trial court may order that the noncustodial parent receive the tax exemption, it must also mandate that the custodial parent execute a waiver. Hart v. Hart, 774 S.W.2d 455, 457 (Ky. App. 1989). Since the trial court did not, Christopher may not have the exemption since Garrett did not live with him during 2010. See 26 U.S.C. 152(e)(1),(2),(4).
Based upon the above, we reverse the decision and remand this case to the trial court for new findings and conclusions.
CLAYTON AND LAMBERT, J., JUDGES, CONCUR.
THOMPSON, JUDGE, DISSENTS BUT WILL NOT FILE SEPARATE OPINION.
