If a Business Was Owned Before the Marriage, Does the Other Spouse Get Half of Its Growth in a Nebraska Divorce?
Not automatically, and not necessarily half. A spouse who owned a business before marriage may be able to keep its established premarital value separate. Whether any increase in value during the marriage is marital depends on two things: proof of the increase and proof of what caused it. Under Nebraska law, growth caused by marital funds or by either spouse's efforts can be marital property. Growth that the owner proves was passive, meaning driven by outside forces and traceable as such, may stay separate.
Two 2026 decisions from the Nebraska Court of Appeals show how much turns on proof. In Jeffers v. Jeffers, the court held that the spouse who wants to share in an asset's appreciation must prove the asset actually appreciated. If that is shown, the spouse claiming the growth is separate must prove it was passive. In McReynolds v. McReynolds, released October 6, 2026, a wife's claim to part of her husband's premarital business failed. The corporate tax returns she relied on did not show the company's value on the date of marriage or the date of separation. Because she did not prove the business appreciated, the court did not need to decide whether any growth was active or passive.
The lesson cuts both ways. A spouse seeking a share should expect to need reliable valuation evidence tied to the dates that matter, because evidence a court admits is not always enough to prove the point. An owner should expect to need proof of the business's premarital value, plus records showing why the business grew and who drove that growth.
Even when some growth is marital, Nebraska divides property equitably, not by a fixed formula. The outcome depends on the facts, the evidence, and the judge's discretion. This post explains how the analysis works, how courts approach valuing a closely held business, what to preserve early, and what to ask a Nebraska divorce lawyer.
The short answer
In a Nebraska divorce, the real question usually isn't "Does my spouse get half?" It's a series of narrower questions:
What was the business worth when the marriage began, and can anyone prove it?
Did it increase in value during the marriage?
If so, how much of that increase came from marital money or either spouse's efforts, and how much from forces outside the marriage?
Each answer has to be supported by evidence. If part of the growth is marital, the court then decides what an equitable division of the entire marital estate looks like. An equal split is possible, but it is not automatic.
How Nebraska courts approach property division
Nebraska divides property in a divorce under Neb. Rev. Stat. § 42-365 (Reissue 2016). Nebraska appellate courts describe the process in three steps:
Classify the parties' property as marital or nonmarital.
Value the marital assets and determine the marital liabilities.
Calculate the net marital estate and divide it under the principles in § 42-365.
Jeffers v. Jeffers, 34 Neb. App. 221, 228–29, 34 N.W.3d 708 (2026).
A single asset can be partly marital and partly nonmarital. Id. at 229. That is the key to a premarital business. The value the owner brought into the marriage can remain separate, while some or all of the growth during the marriage may be marital.
Premarital ownership is the starting point, not the finish line
Owning the business before the wedding doesn't, by itself, establish how much value gets set aside. The burden of proof rests with the party claiming property is nonmarital. Id. at 229.
In Rohde v. Rohde, 303 Neb. 85, 100–03, 927 N.W.2d 37 (2019), the owner did not prove his business's premarital value. The Nebraska Supreme Court upheld treating the entire business as marital. An owner who wants to keep premarital value separate should be prepared to prove what that value was.
Active vs. passive appreciation: what makes growth marital
The Court of Appeals summarized the rule in Jeffers: "Active appreciation converts to marital property only the increase in a nonmarital asset's value due to a contribution of marital funds or efforts." Passive appreciation, by contrast, is "appreciation caused by separate contributions and nonmarital forces." 34 Neb. App. at 229.
Calling growth "passive" takes proof, too. A strong market doesn't automatically make a business's growth passive. If management decisions capitalized on favorable conditions, that growth may still be active. See Stephens v. Stephens, 297 Neb. 188, 205–08, 899 N.W.2d 582 (2017); Parde v. Parde, 313 Neb. 779, 791–96, 986 N.W.2d 504 (2023).
Facts that often matter in the active-versus-passive analysis include:
who made or materially influenced decisions affecting the business's value during the marriage;
whether the spouses contributed marital funds, such as joint savings, to the business, as opposed to the company spending its own money;
whether the increase tracks something outside anyone's control, like market-wide changes in land or equipment prices; and
whether the growth came from people other than the spouses, such as a co-owner or family member who controls the company.
Many businesses show some of both kinds of growth. Sorting one from the other is a factual question. When evidence conflicts, appellate courts may give weight to the trial judge's view of the evidence and the witnesses. Jeffers, 34 Neb. App. at 226.
Whose efforts count?
Quoting Stephens, the Jeffers court explained that "a company's value for purposes of active appreciation is attributable only to the efforts of first-tier management or similar persons with control over the asset's value." Jeffers, 34 Neb. App. at 233 (quoting Stephens, 297 Neb. at 207, 899 N.W.2d at 596).
That standard focuses on control, not job title or hours worked. Consider an owner who sets policy, approves financing, or otherwise makes or materially influences decisions affecting the company's value. That owner may be in a different position from one who has truly stepped away, even if neither handles daily operations.
In Jeffers, the husband held a majority interest in a family farm corporation. The evidence showed his son had taken over operations and the company's business and financial decisions years earlier. The trial court attributed the farm's increase in value mainly to rising land values reflected in comparable sales.
Later, another shareholder's stock was redeemed, which increased the husband's ownership percentage. The Court of Appeals affirmed treating both the disputed appreciation and that ownership increase as nonmarital on that record. Id. at 231–34.
Whose money moved?
It also matters what interest is being valued and whose money went in. In Jeffers, corporate profits earned during the marriage were used to redeem the other shareholder's stock. The wife argued that this made the husband's resulting increase in ownership marital.
The court disagreed on that record. It noted that the son was making the company's financial decisions, and it rejected classifying the corporation's profits as marital property. Id. at 234.
A company spending its own money is not automatically the same as the spouses contributing marital funds. The question is whose funds were contributed and whether that contribution increased the value of the interest being divided.
What about contributions at home?
Section 42-365 directs courts to consider "a history of the contributions to the marriage by each party, including contributions to the care and education of the children, and interruption of personal careers or educational opportunities." Those contributions matter when the court divides the marital estate.
Whether they make a business's growth "active" is a separate question. In Jeffers, the wife testified that she cooked, delivered parts, and provided childcare for her husband's grandchildren. The trial court found those efforts did not drive the increase in the farm's value, and the Court of Appeals affirmed. Id. at 231–32.
That result turned on the evidence and credibility findings in that case. It doesn't mean contributions at home can never bear on active appreciation. It does show they need to be connected to the business's value with evidence.
Who has to prove what
Jeffers addressed the burden of proof, and McReynolds applied it.
The spouse seeking a share must prove the business appreciated. "[T]he burden of proving an asset has appreciated is on the party seeking to share in it." Jeffers, 34 Neb. App. at 231. In McReynolds, the court explained that "[t]o determine the appreciation in a business, its value as of the date of marriage and its value at the time of separation must be established." McReynolds v. McReynolds, 34 Neb. App. 535, 539 (2026).
The spouse claiming the growth is separate must prove that. "The burden to prove that the appreciation is nonmarital, however, remains on the person claiming its separate status." Jeffers, 34 Neb. App. at 232. The Nebraska Supreme Court applied the owning spouse's burden to farmland in Parde.
In practice, both sides have homework:
The spouse claiming a share must prove there was growth to share.
The owner must be prepared to establish the premarital interest being set aside and the extent of any growth that is separately traceable and passive.
Classifying growth as marital is also not the same as awarding the other spouse half of it. Division comes later.
What McReynolds teaches about tax returns and company records
McReynolds is a useful cautionary tale, partly because the property-division issue went to the Court of Appeals twice.
The husband owned a recycling business before the marriage and kept running it afterward. The parties married in July 2021 and separated in April 2023.
The trial and first appeal. At trial, the wife offered the company's corporate tax returns to show the business had grown, and the trial court excluded them. In the first appeal, the Court of Appeals held the returns should have been received. It sent the case back for the trial court to decide whether the evidence, including the returns, supported a finding of active appreciation that could be quantified. McReynolds v. McReynolds, 33 Neb. App. 733, 742–46, 24 N.W.3d 906, 917–19 (2025).
On remand. The trial court reviewed the returns and found them to be some evidence of value, but not dispositive. No expert had offered an opinion on the company's value at the date of marriage or the date of separation. The court also noted that comparing 2020 income with 2021 income was misleading, because the corporation was formed only in the last quarter of 2020. It found the husband credible that the business had not grown, and it again treated the company as his separate property.
The second appeal. In the second appeal, decided October 6, 2026, the wife pointed to the total assets reported on the company's returns as proof of appreciation: about $2.0 million for 2020 and about $3.1 million for 2021. The Court of Appeals affirmed. Among its reasons:
The returns reflected the 2020 and 2021 tax years, not the July 2021 marriage date or the April 2023 separation date. The record contained no other evidence of the company's value on either date.
The evidence did not show that comparing "total assets" on the returns was a proper way to value this company. The wife also offered no evidence that an asset-based approach fit this business.
Because she did not prove the business appreciated, "the court was not required to determine whether it was active or passive." McReynolds, 34 Neb. App. at 541.
What it does, and doesn't, mean
McReynolds does not say tax returns are irrelevant, or that an asset-based approach can never establish value. The first appeal held the returns should have been received, and the trial court treated them as some evidence. The problem in that record was that nothing tied the figures to the relevant dates or supported using them as a measure of the company's value.
Jeffers followed a similar pattern. The parties married in 2007, and the wife relied on the corporation's balance-sheet summaries from 2010 and 2024. The court observed that neither party valued the corporation beyond the net equity stated on those summaries. It questioned whether she had proven any appreciation beyond the farmland. Jeffers, 34 Neb. App. at 230–32.
The common thread is that documents a business prepares for its own purposes may not answer the questions a divorce court has to decide.
How Nebraska courts value a closely held business
In valuing a closely held corporation, "the trial court may consider the nature of the business, the corporation's fixed and liquid assets at the actual or book value, the corporation's net worth, marketability of the shares, past earnings or losses, and future earning capacity." McReynolds, 34 Neb. App. at 539. The valuation method "must have an acceptable basis in fact and principle." Id.; see also McReynolds, 33 Neb. App. at 745–46.
Nebraska courts recognize asset, income, and market approaches to valuing a company. Bohac v. Benes Service Co., 310 Neb. 722, 969 N.W.2d 103 (2022), discussed those approaches in a shareholder-buyout case. The appropriate method in a divorce still depends on the business and the evidence. In general terms:
Asset-based: what the business owns and owes, adjusted to reflect value rather than accounting entries alone.
Income: value based on the earnings the business can reasonably be expected to produce.
Market: comparison to sales of similar businesses, which may be difficult when there are few comparable sales.
Trial judges have discretion to accept or reject a valuation method based on the evidence. On appeal, those decisions are reviewed de novo on the record for an abuse of discretion. McReynolds, 34 Neb. App. at 538.
Which dates matter
Proving appreciation generally calls for reliable evidence of the business's value at two points: when the parties married, and at a relevant later point. In McReynolds, the absence of evidence for the marriage and separation dates was fatal.
More broadly, the Nebraska Supreme Court held in Rohde that a court need not value every marital asset on the same date. The date chosen must rationally relate to the property being valued. The selection of valuation dates for the marital estate remains fact-specific. When the key dates fall mid-year, someone has to bridge the gap between what the records show and what the court needs.
Goodwill: what can and can't be divided
Under Taylor v. Taylor, 222 Neb. 721, 731, 386 N.W.2d 851, 858 (1986), goodwill is divisible as property only if it meets two conditions. It must be a business asset with value independent of the presence or reputation of a particular person. And it must be an asset that could be sold, transferred, conveyed, or pledged.
Goodwill that depends on an owner's personal skill and reputation is not a separately divisible asset. Valuation professionals often call this the difference between "enterprise" and "personal" goodwill. The distinction can matter a great deal in professional practices and owner-driven service businesses.
If some growth is marital, how is it divided?
Nebraska divides the marital estate equitably, not by a fixed percentage. As a general guideline, a spouse is often awarded one-third to one-half of the marital estate, but fairness and reasonableness under the facts of each case control. Parde, 313 Neb. at 789–90. The guideline is not a floor or an entitlement. It applies to the marital estate as a whole, after the court decides which part of the business's growth, if any, belongs in it.
A court can award the business to the spouse who runs it and balance the division in other ways. For example, it can award the other spouse more of the remaining assets or order an equalization payment. The Nebraska Supreme Court has held that nothing in § 42-365 prevents a court from ordering an equalization payment without awarding liquid assets from the marital estate. Karas v. Karas, 314 Neb. 857, 993 N.W.2d 473 (2023).
How and when a payment can realistically be made still depends on the parties' circumstances. A sale may be impractical or costly in some cases, so courts and spouses may consider other ways to structure a division.
Spouses can also reach their own agreement. Under Neb. Rev. Stat. § 42-366 (Reissue 2016), parties may enter a written property settlement agreement "attendant upon their separation or the dissolution of their marriage." Except for terms on child custody and support, the agreement binds the court unless the court finds it unconscionable. Mediation can be a practical place to work toward that kind of agreement once both sides understand what the evidence is likely to show.
What to preserve and gather early
Preserve records you already possess lawfully. Do not remove, alter, or access business records without authorization. Ask your lawyer how to request records you need, whether through formal discovery or a court order. Some business records may also raise confidentiality concerns your lawyer can help you address.
Useful categories often include:
Key dates: your marriage certificate and anything showing when you separated.
Ownership documents: formation documents, operating agreement or bylaws, ownership records, buy-sell agreements, and records of any redemptions or transfers.
Financial records around the key dates: tax returns, financial statements, and balance sheets for the periods surrounding the marriage and the separation. Note exactly what period each one covers.
Any prior valuations: appraisals, and financial statements prepared for lenders, insurers, investors, or potential buyers.
Money in and money out: contributions of marital funds, loans between the spouses and the business, personal guarantees, distributions, and the owner's compensation history during the marriage.
Who made decisions: records showing who controlled hiring, pricing, purchasing, financing, and other decisions affecting value during the marriage.
Any agreement between the spouses: a premarital agreement or any other written agreement about property.
Questions to ask a Nebraska divorce lawyer
What will each of us have to prove about the business, and with what evidence?
Can the business's premarital value be established, and how?
Do we need an independent valuation, and as of which dates?
What would a valuation likely cost compared with what is realistically at stake?
How does my role, or my spouse's role, in controlling the business affect the analysis?
Do any existing agreements, like a premarital or buy-sell agreement, change the picture?
If some growth is marital, what are realistic ways to divide it without selling the business?
Is this something we could resolve in mediation?
Business valuation issues can add time and cost to a case. The earlier both sides identify the dates that matter, the records that exist, and whether an expert is needed, the fewer surprises there tend to be later.
Support beyond the legal issues
A dispute over a family business can be draining, especially when the business is also how the family pays its bills. Zachary W. Anderson Law offers in-house co-parenting and divorce coaching to our clients as part of our services, at no additional fee. Coaching can support you as you get organized, prepare for mediation, and work through decisions during the process. It works alongside your legal representation and isn't a substitute for legal advice.
Frequently asked questions
Is a business I owned before marriage automatically my separate property in Nebraska?
Not automatically. You may be able to keep the business's premarital value separate, but you generally have to prove what that value was. In Rohde, an owner who didn't prove premarital value saw the entire business treated as marital. Growth during the marriage is a separate question that turns on proof of the increase and what caused it.
What is the difference between active and passive appreciation?
Active appreciation is the part of an increase in value caused by marital funds or either spouse's efforts during the marriage, and it is marital property. Passive appreciation comes from separate contributions or outside forces, and it can remain separate if the spouse claiming it proves it. A strong market doesn't automatically make growth passive, and many businesses have some of both.
Who has the burden of proof?
Under Jeffers v. Jeffers (2026), the spouse who wants to share in the growth must first prove the business actually appreciated. That generally means reliable evidence of its value when the parties married and at a relevant later point. If that is established, the spouse claiming the growth is separate must prove it was passive, and the owner also bears the burden of proving any premarital value to be set aside.
Can corporate tax returns prove my spouse's business grew?
They can be evidence, but in McReynolds v. McReynolds (2026) they did not establish appreciation. The returns covered tax years that did not match the dates of marriage or separation, and nothing in that record showed that comparing total assets was a proper way to value that company. Whether tax returns or other company records can carry the burden in another case depends on what else supports them.
Do I need a business valuation expert?
The second McReynolds opinion did not impose a rule requiring an expert in every business-valuation dispute. It held that these tax returns and the other evidence in that record did not establish appreciation. Talk with your lawyer early about whether an expert makes sense for your case, what it would cost, and which dates the valuation should address.
Does caring for our children or running our home give me a share of the business's growth?
Those contributions matter. Section 42-365 directs courts to consider each spouse's contributions to the marriage, including care and education of children and interrupted careers, when dividing the marital estate. Whether they make a business's growth "active" is a separate, fact-specific question. In Jeffers, the court affirmed a finding that a spouse's household and childcare efforts did not drive the business's increase in value on that record.
Is goodwill divided in a Nebraska divorce?
Under Taylor v. Taylor (1986), goodwill is divisible as property only if it is a business asset with value independent of the presence or reputation of a particular person, meaning something that could be sold or transferred. Goodwill tied to an owner's personal skill and reputation is not a separately divisible asset. The distinction often matters most in professional practices and owner-driven service businesses.
Will the court make us sell the business?
Not necessarily. A court can award the business to one spouse and balance the division with other assets or an equalization payment. Spouses can also agree to a structured buyout in a property settlement agreement, which the court reviews for conscionability. The right approach depends on the size of the marital estate, the business's finances, and the rest of the case.
Can a prenuptial or postnuptial agreement protect business growth?
A premarital agreement may address property rights and disposition on divorce. Whether a particular agreement is enforceable depends on its terms and the circumstances in which it was signed, including Nebraska's statutory rules on voluntariness and, where applicable, disclosure. Neb. Rev. Stat. §§ 42-1004(1), 42-1006(1). Agreements signed during the marriage raise different questions: in Devney v. Devney, 295 Neb. 15, 886 N.W.2d 61 (2016), the Nebraska Supreme Court held that a spousal property agreement not made in connection with separation or divorce was not binding on the court in a later divorce, so have any existing agreement reviewed before you rely on it.
Talk with a Nebraska divorce lawyer early
A business may be part of your divorce whether you own it or helped build the life it supported. Either way, the evidence gathered early can shape what follows. A Nebraska divorce lawyer can help you identify what each side will need to prove and how to get there.
Disclaimer
This article is for general educational purposes only and is not legal advice. It reflects Nebraska statutes and appellate decisions available as of October 6, 2026. It may not reflect later changes in the law, including any further appellate review of the decisions discussed. Every case depends on its own facts, the evidence presented, and the court's discretion, and the outcomes of the cases described here cannot predict the outcome of yours. If evidence preservation or a court order is involved in your situation, do not delay getting legal advice. Reading this article does not create an attorney-client relationship with Zachary W. Anderson Law.