The division of property in a Nebraska divorce can be one of the more complicated areas of divorce law when premarital property is involved. For those going through a divorce without a prenuptial agreement but one or both parties had substantial premarital and nonmarital property, whether that property is factored in the equitable distribution of the marital estate depends on the unique set of facts specific to your case. The lawyers at Goosmann Law Firm have divided marital estates and can advise you regarding how the law may applied to your case.
To set up an initial consultation with the Omaha, Nebraska child custody lawyer and divorce lawyer at Goosmann Law Firm, contact the local Goosmann Law Firm office at (855) 909-4442 or please click the following link: https://www.goosmannlaw.com/contact-us/ to start the process to set up an initial consultation with our firm.
Equitable Property Division in Nebraska Divorce
Neb. Rev. Stat. § 42-365 (Reissue 2016) authorizes a trial court to equitably distribute the marital estate according to what is fair and reasonable under the circumstances. In a marital dissolution action, the purpose of a property division is to distribute the marital assets equitably between the parties. There is no mathematical formula by which property awards can be precisely determined, but as a general rule, a spouse should be awarded one-third to one-half of the marital estate, the polestar being fairness and reasonableness as determined by the facts of each case. [i]
In a Nebraska divorce action, the equitable division of property is a three-step process. The first step is to classify the parties’ property as either marital or nonmarital, setting aside the nonmarital property or nonmarital portion of the property to the party who brought the property to the marriage. The second step is to value the marital assets and marital liabilities of the parties. And the third step is to calculate and divide the net marital estate equitably between the parties.
Active Appreciation of Premarital assets in Nebraska Divorces
Historically in Nebraska, separate property was treated as remaining nonmarital unless both of the spouses contributed to the improvement or operation of the property or the spouse not owning the property or not receiving the inheritance or gift significantly cared for the property during the marriage. However, that rule has gradually changed, resulting in the landmark 2017 case Stephens v. Stephens, 297 Neb. 188, 899 N.W.2d 582 (2017). In Stephens, the Court adopted and expanded the “active appreciation rule” where the income or increase in value of nonmarital asset that occurred during the marriage is now treated as marital insofar as it was caused by the efforts of either spouse or both spouses.
The active appreciation rule in Nebraska sets forth the relevant test to determine to what extent marital efforts caused any part of an asset’s appreciation or income.
The Nebraska Supreme Court has two prong test to find active appreciation. This test presumes the appreciation of a nonmarital asset during the marriage is marital unless the party seeking to classify the growth as nonmarital proves:
(1) The growth is readily identifiable and traceable to the nonmarital portion of the account; and
(2) the growth is not due to the active efforts of either spouse.[ii]
Accordingly, under Nebraska law, any appreciation caused by marital contributions is known as active appreciation, and it constitutes marital property that is subject to division. Passive appreciation is restricted to any appreciation caused by separate contributions and nonmarital forces.
Under the active appreciation rules in Nebraska, any property that is subject to division in a divorce can constitute a mixture of marital and nonmarital interests. In other words, a portion of an asset can be marital property while another portion can be separate (nonmarital) property. How the active appreciation rule is applied can vary by the facts of each case. For example, the Court could deem the original value of the property to be nonmarital, and also rule that some portion of the appreciation in value of the asset can be marital.[iii] Real estate that is not improved and grows in value could be determined by a Court to be passive appreciation.[iv]
In order to keep a premarital asset nonmarital in a divorce, a prenuptial agreement could help protect the assets. Further, how the premarital assets are legally structured could also help protect the property and assets.
In the cases where these legal agreements and structures do not exist to provide some protection to nonmarital assets from becoming marital assets, the party seeking to protect the property in a divorce needs to have clear evidence presented at trial to show that the increase in value of the property resulted from something other than the active efforts of either spouse.[v]
If you (or your spouse) are seeking to protect a premarital asset from being divided during a divorce, the burden of proof to show it is nonmarital due to passive appreciation is the person claiming it is nonmarital. Protecting these assets will require a skilled Nebraska divorce attorney on your side.
Goosmann Law – Omaha Divorce Lawyer and Omaha Child Custody Lawyer
If you have an issue with the division of marital property in Nebraska, the lawyers at Goosmann Law are available to discuss the specific facts about your situation and can provide an initial case assessment during an initial consultation. You can schedule a consultation by contacting your local Goosmann Office at (855) 909-4442 or by filling out the contact form on our website https://www.goosmannlaw.com/contact-us/.
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