White v. White
304 Neb. 945
| Neb. | 2020Background
- Tim and Ann White married in 1990; Ann filed for dissolution in May 2017. No minor children; alimony not contested. Major disputes concerned characterization and valuation of two investment accounts and related tax/equalization issues.
- The
6300 account: funded in April 2012 with $100,000 Tim inherited; invested in mutual funds, held solely in Tim’s name, no deposits/withdrawals, dividends reinvested; Tim (a licensed financial advisor) managed allocation using his portfolio approach. - The
Schwab account: opened with 4,900 ConAgra shares from Tim’s inheritance; later received ~38,000 additional ConAgra shares as gifts; during the marriage Tim sold shares, bought ETFs, and commingled marital funds (including $240,000 wired into the account) and used account funds for household expenses and a home purchase. - The district court used June 30, 2017 as the valuation date, allocated the $100,000 original 6300 principal to Tim as nonmarital but classified the 6300 appreciation as marital, treated the Schwab account as entirely marital, and ordered Tim to pay the 2017 joint tax liability and an equalization payment to Ann.
- On appeal, the Nebraska Supreme Court reviewed the three-step property-division framework de novo, affirmed the district court except it held that 6,500 remaining ConAgra shares in the Schwab account were traceable nonmarital property and modified the division and equalization amounts accordingly.
Issues
| Issue | Plaintiff's Argument (Ann) | Defendant's Argument (Tim) | Held |
|---|---|---|---|
| Whether appreciation in the 6300 account is marital or nonmarital | Appreciation should be marital because growth during marriage may be marital if caused by marital efforts | The appreciation is nonmarital—direct fruit of his inheritance and managed by professional money managers (passive) | Court held appreciation marital; Tim failed to prove growth was passive or not caused by his active investment efforts (burden on owning spouse) |
| Whether the Schwab account is marital or nonmarital | Schwab was used and managed as a marital "nest egg" and was commingled; treat as marital | Entire account is nonmarital because funded by inherited/gifted ConAgra stock and opened in his name; growth traceable to nonmarital funds | Court held most of Schwab marital due to commingling and marital use, but reversed as to 6,500 ConAgra shares which remained traceable nonmarital; remainder divided equally |
| Proper valuation date for accounts (June 30, 2017 vs July 31, 2018) | July 31, 2018 valuation would better reflect values; June 30, 2017 gave Tim a windfall | June 30, 2017 is related to separation of working finances and is reasonable | Court affirmed June 30, 2017 as a rational valuation date; no abuse of discretion |
| Allocation of 2017 joint tax liability | (Implicit) tax should be equitably divided; income tax is a marital debt | Court ordered Tim to pay entire 2017 liability because he paid taxes from Schwab and valuation date favored him | Court upheld district court allocation to Tim given facts (withholdings, who paid from Schwab, and fairness in light of account growth) |
| Equalization payment ordered by district court | (Implicit) seeks amount tied to equitable division using correct classifications/values | Equalization payment improper if disputed assets treated nonmarital | Court affirmed equalization after modifying divisions to account for the 6,500 ConAgra shares; no further change required |
Key Cases Cited
- Stephens v. Stephens, 297 Neb. 188, 899 N.W.2d 582 (Neb. 2017) (articulated and applied the active-appreciation rule; burden on owning spouse to show appreciation was not caused by marital efforts)
- Coufal v. Coufal, 291 Neb. 378, 866 N.W.2d 74 (Neb. 2015) (discussed traceability and when appreciation may remain nonmarital based on passive market forces)
- Stanosheck v. Jeanette, 294 Neb. 138, 881 N.W.2d 599 (Neb. 2016) (held investment earnings on nonmarital retirement funds may be nonmarital if attributable solely to market/guaranteed forces)
- Dooling v. Dooling, 303 Neb. 494, 930 N.W.2d 481 (Neb. 2019) (reaffirmed three-step framework for equitable property division)
- Meints v. Meints, 258 Neb. 1017, 608 N.W.2d 564 (Neb. 2000) (addressed allocation of income tax liabilities in dissolution; penalties and equitable division considerations)
- Baker v. Baker, 753 N.W.2d 644 (Minn. 2008) (considered effect of professional money managers and the account owner's control in active-appreciation analysis)