Businesses created during a marriage are generally considered marital property subject to division. If you started the company before you married, the value it held at the time of your wedding remains your separate property. Any subsequent increase in value due to “passive growth” remains separate.
Crucially, Nebraska law presumes that any increase in the business’ value during the marriage is a marital asset, subject to equitable division, unless the owning spouse can prove the appreciation was solely passive (i.e., not caused by the efforts of either spouse).
How Nebraska courts divide business assets
Nebraska follows the principle of equitable distribution, meaning the court aims for a fair division of marital assets, which may not always be an equal 50/50 split. If you created your company from the ground up after your wedding date, the court considers it entirely marital property, which typically means:
- The business’ value will be part of the total marital estate.
- The court will calculate the business’ marital value, which is divided between the spouses, typically through an offsetting distribution (where one spouse retains the business and compensates the other with other assets or a cash payment) rather than a physical split of the company itself.
The court views a business created during the marriage as a joint asset because Nebraska law classifies all property acquired by either spouse during the marriage as marital property, irrespective of whose name is on the title.
Understanding active appreciation
For businesses owned before the marriage, the law introduces a key complication known as active appreciation. While the starting value of your premarital business is yours alone, the increase in its value during the marriage is called “appreciation.”
- Active appreciation refers to the increase in value resulting from the active work and effort of either spouse, including financial investment or personal labor.
- The portion of growth aided by a spouse’s efforts or commingled funds is a marital asset subject to division.
- Passive growth, like general economic changes or market shifts, may remain separate property.
For any appreciation to be withheld from the marital estate and not subject to division, you must prove that the growth was purely passive. Without this evidence, the court presumes the appreciated value is a marital asset.
Protect your financial future
The classification and division of a business are highly dependent on the unique facts of your case and the timeline of your marriage. A crucial step is to obtain a professional business valuation as soon as possible.
This valuation—often handled by forensic accountants and appraisers—accurately determines the true value of the marital interest. Your future may hinge on getting this valuation and division done correctly. Guidance from a skilled divorce attorney who understands these complex issues is crucial for protecting both your company and your own economic well-being.