Stephens v. Stephens
297 Neb. 188
| Neb. | 2017Background
- Robert and Janet Stephens married in 1991; dissolution filed in 2014 after ~25 years of marriage and two minor children.
- Robert co-founded and served as president of Stephens & Smith Construction Co., Inc.; he owned 34% of the company. His premarital 1991 stock was valued at ~$298,459 and at dissolution at ~$5,044,934 (large appreciation during marriage).
- Janet worked as a real estate agent for part of the marriage but suffered mental illness during the last ~10 years, receiving SSDI and represented by a guardian ad litem; she did not participate in trial.
- The district court treated most of Robert’s business interests (including Stephens & Smith) as nonmarital and excluded appreciation, but awarded Janet a $1.1 million “Grace award.” The court treated several other properties as marital and split them.
- The court awarded Janet $1,000/month spousal support under Neb. Rev. Stat. § 42-362 for 120 months and ordered life insurance; Janet appealed classification of Stephens & Smith appreciation, support duration, and the in-kind transfer of partnered property.
Issues
| Issue | Plaintiff's Argument (Janet) | Defendant's Argument (Robert) | Held |
|---|---|---|---|
| Whether appreciation of Robert’s Stephens & Smith stock during the marriage is marital property | Appreciation during the marriage is marital because it resulted from Robert’s active efforts and thus should be included in the marital estate | Appreciation is nonmarital because stock was premarital and growth was passive/organic or due to market forces or pre-marital groundwork; only appreciation due to non-owning spouse should be marital | Court reversed: adopt active-appreciation rule—appreciation during marriage is marital to the extent caused by active efforts of either spouse; remanded to include the increase in value of Robert’s 34% interest as marital and to re-divide (Grace award vacated) |
| Validity/continuation of spousal support under § 42-362 (duration) | Support should continue so long as Janet’s mental illness continues | Fixed term (120 months) is appropriate; court has discretion to limit duration | Court affirmed trial court’s 120-month award as a permissible exercise of discretion; § 42-362 does not mandate support continue for entire duration of illness and award may be revised later |
| Court ordering transfer of partnership/business interests (in-kind award) despite articles/partner consent concerns | Transfer may be impracticable if other partners refuse consent; cash award preferable | In-kind division of these marital interests was appropriate and court trusted Robert to effect transfer | Affirmed: trial court did not abuse discretion in awarding ownership interests in-kind; parties may seek modification if transfer fails |
Key Cases Cited
- Meints v. Meints, 258 Neb. 1017 (2000) (endorsing three-step dual classification: classify, value, divide)
- Stanosheck v. Jeanette, 294 Neb. 138 (2016) (investment earnings on nonmarital retirement accounts may be nonmarital only if growth is traceable and not due to either spouse’s efforts)
- Coufal v. Coufal, 291 Neb. 378 (2016) (increase in premarital retirement account value was nonmarital where not caused by spouse efforts)
- Rezac v. Rezac, 221 Neb. 516 (1985) (appreciation of premarital corporate stock can be marital when caused by owner’s contributions/reinvestment)
- Van Newkirk v. Van Newkirk, 212 Neb. 730 (1982) (historically limited inclusion of inherited/gift property absent spousal contribution; discussed in later cases)
- Grace v. Grace, 221 Neb. 695 (1986) (court may award lump-sum ‘‘Grace award’’ where strict classification yields inequitable result; Court here limits Grace given active-appreciation rule)