We will be taking a deeper dive into complex issues that arise when a judge divides marital property in a Nebraska divorce. Let’s first look at the general rules.
Reasonable, fair and equitable property division
Nebraska’s property division statute directs that property division be “reasonable,” taking into account the spouses’ circumstances, marriage length, marital contributions including to child “care and education,” interruption of education or career, and ability of a spouse to work while preserving the interests of children in their custody. Reasonable property division is often called “equitable distribution” of property, a nod to the underlying notion that it should be based on equity, or fairness, rather than on any formula.
Three-step division process
Nebraska courts have developed a three-step process for equitable division in divorce:
- Classify all property owned by either or both parties as marital or nonmarital, also called separate.
- Determine the value of the marital property, also called the marital estate, as well as marital debt.
- Calculate the net marital estate and divide the property between the parties.
In a divorce, if the parties cannot negotiate a settlement agreement dividing their marital estate, the judge will have to walk through the three steps and make those decisions.
Focusing on the first step, marital property is all property and income either party or both acquired during the marriage unless an asset is nonmarital. Nonmarital property is that which a spouse owned before marriage or received as a gift or inheritance as an individual. Separate, nonmarital assets stay with their owners after the divorce and are not subject to division.
Sometimes the classification into marital or nonmarital can become complex and the way an asset is titled is not necessarily conclusive. At trial, if a spouse claims that an asset is nonmarital and should remain with them, it is their burden to prove this.
Here is the challenge at step one. Sometimes an asset can start out as nonmarital but become marital during the marriage such as by comingling marital with nonmarital funds in one account. Or sometimes an asset consists of both marital and nonmarital components. What about income generated by a nonmarital asset during marriage or active or passive increase in value (appreciation) of a nonmarital asset during marriage?