In almost every Nebraska divorce, spouses must address the issue of determining premarital and nonmarital property. This is especially true in high-wealth divorces, which frequently entail assets acquired from a variety of sources, and second-marriage divorces, which often involve spouses who have acquired a sizable portion of their wealth prior to marriage.
Dividing Property in a Nebraska Divorce
Under Nebraska law, courts equitably divide all assets and debts acquired by either spouse during marriage, and most courts interpret equitable to mean equal. However, Nebraska courts do not divide premarital and nonmarital property, and instead award such property exclusively to one spouse. Therefore, many contested Nebraska divorces center on the issue of defining premarital and nonmarital property.
Defining Marital and Nonmarital Property in Nebraska
In Nebraska, marital property is defined as all property acquired by either spouse during marriage, including assets and debts, irrespective of how such property is titled. Conversely, nonmarital property is all property not considered marital and therefore not divided in a divorce. Nebraska law generally defines nonmarital property to include:
- Premarital Property: Property owned by either spouse prior to marriage;
- Gifted Property: Property individually gifted to one spouse during marriage by a third party; and,
- Inherited Property: Property inherited individually by one spouse during marriage.
In addition to these general classifications of nonmarital property, Nebraska courts also typically define (i) property acquired before the parties are divorced but after the parties have either filed for divorce or physically and financially separated, i.e. post-marital property, and (ii) student loans as nonmarital property.
Yet, although these classifications seem straightforward, three common legal issues arise when spouses dispute nonmarital and premarital property awards.
Proving Nonmarital and Premarital Property
First, the spouse asking to be awarded nonmarital or premarital property must prove that the property is in fact nonmarital. Typically, this requires gathering statements or other documentary evidence to show when and how the property was acquired. If a spouse cannot gather documentary evidence to prove the nature of the disputed property, Nebraska courts likely will assume that the property is marital.
Comingled Marital and Nonmarital Property
Second, if marital and nonmarital property has been comingled, i.e. combined, then the spouse asking to be awarded a portion of the combined property as his or her nonmarital property must prove that the nonmarital portion can be separated from the marital portion. This is known as tracing nonmarital property. For example, when spouses combine their premarital bank accounts into a joint account during marriage, Nebraska courts often struggle to determine what, if anything, remains of the originally invested premarital funds. This is also true when spouses combine inherited funds with marital funds.
Appreciation on Nonmarital Property During Marriage
Third and finally, spouses often litigate whether the growth on nonmarital property during marriage should be treated as marital property. For example, if one spouse owns a premarital business that is worth one million dollars at the time of marriage and that business grows to be worth $11 million during marriage, then then the $10 million in growth may be disputed as to its marital or nonmarital nature.
Nebraska law classifies appreciation on nonmarital property that is the product of either spouse’s efforts during marriage to be marital property, contrasted to passive growth that is solely the product of market forces. In the previous example, if either spouse helped to operate the premarital business during marriage, then the $10 million in growth would almost certainly be considered marital property. If, however, the business was owned via shares of stock and neither spouse helped with the business, then the $10 million in growth would almost certainly be retained by the owning-spouse as nonmarital property.
Skillfully resolving nonmarital and premarital property disputes in a divorce is critical to ensuring a successful division of property. This area of Nebraska law is nuanced and requires experience to navigate effectively in negotiations and trial. Our team at Koenig|Dunne has over 150 years of combined legal experience. We have authored books and published articles addressing nonmarital property issues, and it is our mission to provide wholehearted, excellent support to our clients throughout the entire divorce process.