Stephens v. Stephens
297 Neb. 188
| Neb. | 2017Background
- Robert and Janet Stephens married in 1991; Robert co‑founded and was president of Stephens & Smith Construction Co., Inc., owning 34% of the stock; the marriage lasted ~25 years and produced significant appreciation in Robert’s business interests.
- At marriage Robert’s Stephens & Smith stock was worth ~$298,459; at dissolution it was ~$5,044,934.16. Robert worked full time as president during the marriage; Janet suffered mental illness during the last ~10 years and received SSDI.
- Trial evidence consisted mainly of documentary exhibits and Robert’s testimony; Janet did not participate but was represented by a guardian ad litem (GAL).
- The district court classified many small real estate interests as marital, but concluded Robert’s interests in several entities (including Stephens & Smith and its subsidiary R.I.P.) were nonmarital, awarding Janet a $1.1 million "Grace award." Court also awarded Janet $1,000/month alimony for 120 months under Neb. Rev. Stat. § 42‑362.
- Janet appealed, asserting error in (1) excluding Stephens & Smith’s appreciation from the marital estate, (2) limiting duration of § 42‑362 support, and (3) ordering transfers of partnership interests when articles might prohibit transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Classification of appreciation in Stephens & Smith | Janet: Appreciation during marriage should be marital because caused by Robert’s active efforts | Robert: Appreciation is nonmarital (premarital asset) unless caused by the non‑owning spouse; relied on Van Newkirk/Grace line | Court: Reverse — adopt active appreciation rule; appreciation is marital to extent caused by efforts of either spouse; include entire increase during marriage in marital estate and vacate Grace award |
| Duration of spousal support under § 42‑362 | Janet: Support should continue so long as her mental illness continues | Robert: Court limited support to 120 months (no cross‑appeal) | Court: Affirmed discretion to award 120 months; § 42‑362 does not mandate support for entire duration of illness; award subject to future revision |
| Transfer vs. cash award for partnership/real estate interests | Janet: Concern that transfer ordered (co‑ownership) may be impossible due to other partners not consenting; preferred cash | Robert: Court ordered transfer to make assets marital and avoid tax consequences of forced sale | Court: Affirmed ordering transfers; left remedy open (parties may seek modification if transfers cannot be completed) |
Key Cases Cited
- Van Newkirk v. Van Newkirk, 212 Neb. 730 (recognizing limits on treating inherited/premarital property as marital absent contribution or care)
- Rezac v. Rezac, 221 Neb. 516 (treating appreciation of premarital corporate stock as marital where owning spouse’s contributions caused growth)
- Grace v. Grace, 221 Neb. 695 (awarding lump‑sum relief despite asset being nonmarital to achieve equitable result)
- Meints v. Meints, 258 Neb. 1017 (adopting three‑step dual classification framework for marital vs nonmarital property)
- Stanosheck v. Jeanette, 294 Neb. 138 (setting test for classifying investment earnings on nonmarital retirement accounts as nonmarital when growth is identifiable and passive)
- Coufal v. Coufal, 291 Neb. 378 (applying active/passive appreciation analysis to retirement account growth)
- Heald v. Heald, 259 Neb. 604 (discussing marital property presumptions and income during marriage)
- Buche v. Buche, 228 Neb. 624 (cited by trial court on business appreciation issues)