NOT TO BE PUBLISHED

OPINION

TAYLOR, Judge.

Audrey E. Sharber, in her capacity as Executrix of the Estate of Aubrey E. Sharber, and Audrey E. Sharber, in her individual capacity, bring this appeal from a December 14, 2010, order of the Christian Circuit Court, Family Court Division, (family court) awarding Glenda Gregg Sharber (now Gregg) a judgment in the amount of $55,000. We affirm in part, reverse in part, and remand.

Aubrey E. Sharber and Glenda Gregg Sharber (now Gregg) were married February 14, 1996. No children were born of the parties' marriage. In December 2004, Glenda initiated a dissolution of marriage proceeding. Thereafter, on June 23, 2005, an agreed order was entered restraining the parties from "damaging, destroying, disposing and/or concealing any of their property during the pendency of this action." Eventually, the family court rendered an interlocutory decree of dissolution of marriage which was entered October 23, 2006.1 The interlocutory decree dissolved the parties' marriage but reserved adjudication of all marital property issues. However, little progress was made in resolving property division over the next several years due in part to Aubrey's unwillingness to comply with court orders.

In August 2008, unbeknownst to Glenda and without notice to the family court, Aubrey withdrew approximately $55,000 from his federal employee Thrift Savings Plan (TSP). Subsequently, Aubrey informed the family court that he was terminally ill from cancer; Aubrey passed away on January 26, 2009. Upon Aubrey's death, the parties' marital property issues remained unadjudicated before the family court.

The following month, February 2009, Audrey was appointed personal representative of her father's estate in Christian District Court, Probate Action No. 09-P-00051.2 Due to Aubrey's death, the family court substituted Audrey as personal representative of Aubrey's estate as a party. Kentucky Rules of Civil Procedure (CR) 25.01. Audrey, as personal representative of Aubrey's estate,3 then filed a motion in the family court to set a mediation date, to access funds in a joint checking account she held with her father, to authorize the paying of funeral expenses, and to require Glenda to provide documentation of her expenditures. Thereafter, Audrey also claimed to be the individual owner of certain jointly held accounts with her father, Aubrey; however, Glenda asserted these accounts were marital assets. As a result, the family court also joined Audrey in her individual capacity as a party on October 7, 2009.

On December 4, 2009, the parties executed a settlement agreement resolving all remaining property issues. Therein, the parties agreed, in relevant part:

On January 14, 2010, Findings of Fact, Conclusions of Law and Final Decree (final decree) were entered resolving all remaining issues in the dissolution proceeding. The final decree incorporated the parties' settlement agreement therein. As noted, the settlement agreement required Audrey to submit a $55,000 lump sum payment to Glenda within ten days thereof. However, Audrey did not timely remit the lump sum $55,000 payment to Glenda. Glenda then filed a Motion to Compel Compliance with the Settlement Agreement and Motion to Show Cause seeking to have Audrey individually and in her capacity as personal representative held in contempt for failing to timely remit the $55,000 lump sum payment due under the terms of the settlement agreement. Audrey responded that she was unable to pay the $55,000 lump sum payment because all of Aubrey's accounts which she administered were frozen, including his TSP and a U.S. Bank account. Audrey stated that the funds in these accounts were needed to pay Glenda the $55,000 lump sum payment per the settlement agreement. The family court ultimately found Audrey to be in contempt but withheld imposition of sentence.

Subsequently, Audrey retained new counsel and filed a motion for summary judgment on July 1, 2010. Therein, Audrey maintained that insufficient funds remained in Aubrey's estate to pay the $55,000 lump sum payment as required by the settlement agreement. Additionally, Audrey argued that her father, Aubrey, had designated her beneficiary of his TSP in the event of his death. As Aubrey passed away, the TSP funds passed to and have been paid to Audrey as beneficiary. Audrey thus maintained that the TSP funds were not subject to division or the jurisdiction of the family court.

By order entered December 14, 2010, the family court ordered Audrey in her capacity as personal representative and individually to pay Glenda the $55,000 lump sum payment as required by the settlement agreement. In so doing, the family court concluded:

This appeal follows.

Audrey initially contends that the family court was without jurisdiction to adjudicate property issues in the dissolution of marriage action after Aubrey's death. Audrey believes that Aubrey's death divested the family court of jurisdiction over property issues and vested that jurisdiction with the probate court.

The Kentucky Supreme Court has recently addressed this very issue in Goldstein v. Feeley, 299 S.W.3d 549 (Ky. 2009). In Goldstein, the Court held that a circuit court has subject matter jurisdiction over a dissolution of marriage proceeding and in rem jurisdiction over the disputed marital property after the death of one of the parties. The Court reasoned that the death of a party did not "divest the circuit court of jurisdiction over the marital property, nor did it eliminate the necessity of equitably dividing the marital property." Id. at 555. The Court further held that the district (probate) court did not have jurisdiction to divide the marital property. Id. Thus, we conclude that the family court possesses jurisdiction.

Audrey next argues that the family court erred by joining her as a party in her individual capacity. Audrey argues that she has no individual interest in the dissolution and only participated as the personal representative of Aubrey's estate.

In this Commonwealth, a circuit court may join a third party in a dissolution of marriage action pursuant to KRS 403.150(6). Thereunder, "[t]he court may join additional parties proper for the exercise of its authority to implement this chapter." In particular, a third party may be joined in a dissolution action to resolve conflicting interests in property. 27A C.J.S. Divorce § 175 (2013).

In this case, the record indicates that Audrey asserted that she was the beneficiary of Aubrey's TSP and entitled to all proceeds upon his death. Consequently, Audrey asserted an individual interest in the TSP. Likewise, Glenda asserted that the TSP constitutes marital property and that she is entitled to a portion of the TSP. Moreover, as will be discussed later in this opinion, there are allegations that Audrey, in her capacity as personal representative of the estate, engaged in fraud and other misconduct possibly justifying imposition of individual liability upon her. Based upon the above facts, we believe the circuit court properly joined Audrey in her individual capacity.

Audrey also maintains that the family court erred by determining that she was improperly designated as beneficiary of the TSP. Audrey argues that Aubrey's designation of her as beneficiary was proper under federal law. In its order, the circuit court held that Aubrey's designation of Audrey as beneficiary of the TSP account was improper and reasoned:

It is well-settled that the TSP is a federal employee benefit and that federal law exclusively governs the designation of a beneficiary in a TSP. 5 C.F.R. § 870.802 (2010). State courts generally have no general jurisdiction over a TSP. 5 C.F.R. § 1653.3 (2012). Pursuant to applicable federal statutes and regulations, the TSP will honor "qualifying" state court orders; however, the TSP solely determines whether a state court order constitutes a qualifying order. 5 C.F.R. § 1653.3 (2012).4 5 C.F.R. § 1653.13 (2007).

In our case, the family court possesses no jurisdiction over the TSP and cannot determine that the TSP erroneously allowed Aubrey to change his beneficiary from Glenda to Audrey. The TSP apparently determined that Audrey was beneficiary of the TSP and forwarded the funds in the TSP to Audrey. A letter from the TSP dated March 3, 2010, stated:

As the TSP determined that Audrey was the beneficiary and forwarded the funds in the TSP to Audrey, we do not believe the circuit court possesses jurisdiction to determine that the TSP erred by so doing.

Audrey additionally asserts that the family court improperly determined that the TSP was a marital asset and improperly awarded Glenda $55,000 of proceeds in the TSP. Audrey believes that the settlement agreement controls the parties' disposition of marital and nonmarital property. We agree.

KRS 403.1805 reads, in part:

Under KRS 403.180(2), the terms of a settlement agreement as to property issues are binding upon a court unless the court finds the agreement unconscionable. Bailey v. Bailey, 231 S.W.3d 793 (Ky. App. 2007).

In our case, the family court has not set aside the settlement agreement as unconscionable. Therefore, the settlement agreement controls the disposition of property between the parties, and the court may not disregard the settlement agreement as to property disposition absent a finding of unconscionability. Hence, the family court erred by determining that the TSP was a marital asset and awarding Glenda $55,000 thereof. Rather, the parties and family court are bound by the terms of the property settlement agreement as incorporated into the final decree.

Under the settlement agreement as incorporated in the final decree, its terms plainly require Audrey, as personal representative of the estate, to remit a $55,000 lump sum payment to Glenda. As to this obligation, the settlement agreement is unambiguous. The failure of Audrey to remit the $55,000 lump sum payment represents a clear breach of the settlement agreement and a violation of the final decree incorporating said agreement. Accordingly, we conclude that Audrey's failure to remit the $55,000 lump sum payment constitutes a breach of the settlement agreement and violation of the final decree incorporating same.

Audrey next argues that the family court improperly imposed a constructive trust in the amount of $55,000 upon the proceeds from the TSP and improperly ordered Audrey individually to pay Glenda the $55,000 lump sum payment. We will initially address the constructive trust issue and then Audrey's individual liability.

A constructive trust is a legal fiction created by equity to meet the demands of justice. 90 C.J.S. Trusts § 11 (2013). In this Commonwealth, our Court has described a constructive trust as arising:

Rose v. Ackerson, 374 S.W.3d 339, 344 (Ky. App. 2012.) (quoting Keeney v. Keeney, 223 S.W.3d 843, 848 (Ky. App. 2007)). And, a constructive trust must be demonstrated by clear and convincing evidence. Id.

In the present case, the parties entered into a settlement agreement that was ultimately incorporated into a final decree of the family court. Audrey, in her capacity as personal representative of the estate, signed the settlement agreement. Under the terms of the settlement agreement, Audrey agreed to remit to Glenda a $55,000 lump sum payment. After entering into the settlement agreement and entry of the final decree incorporating same, Audrey then represented to the family court that she intended to make the lump sum payment of $55,000 from funds from the TSP. The funds in the TSP were unfrozen, and it appears that the TSP forwarded funds from the account to Audrey as beneficiary thereof. Audrey then refused to remit the $55,000 lump sum payment. Instead, she claims individual entitlement to the funds of the TSP as beneficiary thereof and concomitantly claims that the estate does not possess sufficient sums to pay the $55,000 lump sum payment as due under the settlement agreement. Also, Audrey believes that the "anti-assignment provision" of 5 U.S.C.A. § 8437 (e)(1) (West 2013) precludes the family court from invoking a constructive trust on the proceeds of the TSP in her possession.

It is apparent that Audrey obtained the funds from the TSP by representing to the family court and Glenda that such funds would be utilized to make the $55,000 lump sum payment as required by the settlement agreement. By so doing, Audrey gained access to the funds in the TSP through misrepresentation and only upon a promise to pay Glenda the $55,000 lump sum payment. Considering Audrey's actions, it would be unjust to allow Audrey to retain the proceeds of the TSP and not remit the $55,000 lump sum payment pursuant to the settlement agreement. Under these facts, we believe the circuit court properly imposed a constructive trust upon $55,000 of the proceeds from the TSP held by Audrey. See Rose, 374 S.W.3d 339.

It must be emphasized that a constructive trust in $55,000 of the proceeds of the TSP does not equate to individual liability of Audrey. It only entitles Glenda to recover $55,000 from the proceeds of the TSP. To do so, the TSP proceeds must be capable of being specifically identified by Glenda; thus, Glenda must trace the specific proceeds from the TSP account into existing funds held by Audrey. 76 Am. Jur. 2d Trusts § 175 (2013). Stated differently, a constructive trust is only imposed upon identifiable property that can "serve as the res upon which a trust can be imposed and possession of that res or its product by the person who is to be charged as the constructive trustee." 76 Am. Jur. 2d Trusts § 175 (2013) (footnotes omitted).

Moreover, we do not believe that 5 U.S.C.A. § 8437 (e)(2) (West 2013) precludes imposition of a constructive trust upon the funds from the TSP paid to Audrey as beneficiary. 5 U.S.C.A. 8437 § (e)(2) (West 2013) provides:

Therein, it is clear that funds in a TSP may not be subject to execution, levy, or any legal process by a court. However, in our case, the TSP has already forwarded the funds in Aubrey's TSP to Audrey, as beneficiary. As these funds have been forwarded to Audrey as beneficiary, the funds are no longer in a TSP but are rather held by a third party, Audrey. Consequently, we view 5 U.S.C.A. § 8437 (e)(2) (West 2013) as inapplicable.

As to Audrey's individual liability for payment of the $55,000 as required by the settlement agreement, we view KRS 396.185 as controlling. It provides, in part:

KRS 396.185. Under KRS 396.185(1), a personal representative of an estate is generally not individually liable under contracts entered into in her capacity as personal representative. But, under KRS 396.185(2), the personal representative is individually liable for torts or obligations arising out of the representative's administration of the estate or control of the estate's assets if the representative is as fault.

In our case, Audrey clearly signed the settlement agreement in her capacity as personal representative; thus, Audrey is not individually liable for payment of the $55,000 under the settlement agreement per KRS 396.185(1). Even though Audrey is not contractually liable under KRS 396.185(1), she may be individually liable for torts committed in her role as personal representative under KRS 396.185(2). Particularly, it is well-recognized that the personal representative of an estate is individually liable for fraud or other torts arising from her control of assets or administration of the estate. The family court has not made any findings of fact or conclusions of law as to whether Audrey committed torts, including fraud, in her control of estate assets or administration of the estate as its personal representative. Upon remand, the family court shall consider whether Audrey may be held individually liable pursuant to KRS 396.185(2).

We view Audrey's remaining contentions as moot.

In sum, we hold that the parties and family court are bound by the terms of the settlement agreement as incorporated into the final decree. Under those terms, Audrey, as personal representative of the estate, is obligated to remit to Glenda a lump sum $55,000 payment. Considering the facts herein, the family court properly imposed a constructive trust upon $55,000 of the proceeds from the TSP that were paid to Audrey as beneficiary.6 Upon remand, the family court shall determine if Audrey may be held individually liable under KRS 396.185(2).

For the foregoing reasons, the order of the Christian Circuit Court is affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion.

ALL CONCUR.