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Nebraska Supreme Court Advance Sheets

299 Nebraska Reports

WESTWOOD v. DARNELL

Cite as 299 Neb. 612

Jennifer Westwood, appellant, v. 

Cheryl A. Darnell, appellee.

___ N.W.2d ___

Filed April 13, 2018. No. S-17-538.

1. Divorce: Child Custody: Child Support: Property Division: Alimony: 

Attorney Fees: Appeal and Error. In a marital dissolution action, an 

appellate court reviews the case de novo on the record to determine 

whether there has been an abuse of discretion by the trial judge. This 

standard of review applies to the trial court’s determinations regarding 

custody, child support, division of property, alimony, and attorney fees.

2. Evidence: Appeal and Error. In a review de novo on the record, an 

appellate court is required to make independent factual determinations 

based upon the record, and the court reaches its own independent conclusions with respect to the matters at issue.

3. ____: ____. When evidence is in conflict, the appellate court considers 

and may give weight to the fact that the trial court heard and observed 

the witnesses and accepted one version of the facts rather than another.

4. Judges: Words and Phrases. A judicial abuse of discretion exists if the 

reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters 

submitted for disposition.

5. Property Division. The purpose of a property division is to distribute 

the marital assets equitably between the parties.

6. ____. Under Neb. Rev. Stat. § 42-365 (Reissue 2016), the equitable division of property is a three-step process. The first step is to classify the 

parties’ property as marital or nonmarital. The second step is to value 

the marital assets and marital liabilities of the parties. The third step 

is to calculate and divide the net marital estate between the parties in 

accordance with the principles contained in § 42-365.

7. ____. The ultimate test in determining the appropriateness of the division of property is fairness and reasonableness as determined by the 

facts of each case.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

05/11/2018 01:09 AM CDT
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Nebraska Supreme Court Advance Sheets

299 Nebraska Reports

WESTWOOD v. DARNELL

Cite as 299 Neb. 612

8. Property Division: Proof. The burden of proof to show that property is 

nonmarital remains with the person making the claim.

9. Divorce: Property Division. As a general rule, all property accumulated and acquired by either party during the marriage is part of the 

marital estate, unless it falls within an exception to the general rule.

10. ____: ____. Exceptions to the rule that all property accumulated and 

acquired during the marriage is marital property includes property accumulated and acquired through gift or inheritance.

11. Divorce: Property Division: Taxes. Ordinarily, a trial court in Nebraska 

should not consider the speculative tax consequences of its distribution 

orders unless it has ordered the immediate liquidation or sale of an asset 

or a party must sell an asset to satisfy a monetary judgment.

Appeal from the District Court for Lancaster County: Lori

A. Maret, Judge. Affirmed.

Elaine A. Waggoner, of Waggoner Law Office, for appellant.

B. Gail Steen, of Steen Law Office, for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, 

JJ., and Steinke, District Judge.

Heavican, C.J.

INTRODUCTION

The district court entered a decree dissolving the marriage 

of Jennifer Westwood and Cheryl A. Darnell and dividing their 

marital estate. Westwood appeals. We affirm.

BACKGROUND

Westwood and Darnell were married in Vermont in 2011. 

No children were born of the marriage. The parties separated 

on or about June 25, 2015. The district court’s decree awarded 

each party her personal property, automobile, and retirement 

account. Westwood was ordered to pay an equalization payment to Darnell in the amount of $3,755.67.

The record indicates that Westwood and Darnell were 

both employed by the Nebraska Department of Correctional 
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299 Nebraska Reports

WESTWOOD v. DARNELL

Cite as 299 Neb. 612

Services. Both earned comparable salaries and had premarital 

retirement accounts to which they continued to contribute after 

they married. Household expenses were split equally.

Westwood quit her job in March 2015. Shortly thereafter, she withdrew $75,393.04 from her retirement account. 

After taxes, penalties, and fees, the sum of $51,999.99 was 

deposited in the parties’ joint bank account. The couple then 

paid off outstanding marital debts and deposited some of the 

money in a new retirement account. Among the bills paid with 

the proceeds from the withdrawal were the outstanding balances of $20,849.73 for Darnell’s vehicle and $12,855.89 for 

Westwood’s vehicle.

When the parties separated in June 2015, they had no marital debt except the mortgage on their home and the balance on 

a credit card which had been used to purchase items for household improvements. Each party also had a vehicle of somewhat 

similar value, a retirement account, and jointly held checking 

and savings accounts.

The parties purchased a home together, though only 

Westwood was listed on the deed. The marital home was sold 

in August 2015. Westwood kept the $11,150.81 proceeds from 

the sale of the home. At some point prior to entry of the decree, 

Westwood paid Darnell $1,250.

Westwood filed for divorce in December 2015. Following a 

trial, the district court awarded each party the personal property and automobile in her possession, her separate retirement 

account, and any bank accounts in her own name. Westwood 

was ordered to make an equalization payment to Darnell 

of $3,755.67.

Westwood appeals.

ASSIGNMENTS OF ERROR

On appeal, Westwood assigns that the district court erred 

in its division of the marital property by (1) not classifying as 

separate property the proceeds from Westwood’s withdrawal 
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299 Nebraska Reports

WESTWOOD v. DARNELL

Cite as 299 Neb. 612

of $51,999.99 from her retirement account; (2) failing to consider that Darnell was unjustly enriched by payment of the 

loan on her vehicle; and (3) failing to consider that Darnell 

refused to file taxes jointly, thus refusing to share in the tax 

burden imposed upon the withdrawal of Westwood’s retirement funds.

STANDARD OF REVIEW

[1] In a marital dissolution action, an appellate court reviews 

the case de novo on the record to determine whether there has 

been an abuse of discretion by the trial judge. This standard 

of review applies to the trial court’s determinations regarding custody, child support, division of property, alimony, and 

attorney fees.1

[2,3] In a review de novo on the record, an appellate court 

is required to make independent factual determinations based 

upon the record, and the court reaches its own independent 

conclusions with respect to the matters at issue.2 However, 

when evidence is in conflict, the appellate court considers 

and may give weight to the fact that the trial court heard and 

observed the witnesses and accepted one version of the facts 

rather than another.3

[4] A judicial abuse of discretion exists if the reasons or 

rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in 

matters submitted for disposition.4

ANALYSIS

In her first assignment of error, Westwood asserts that the 

district court erred in treating as marital property the funds 

Westwood withdrew from her retirement account.

1 Osantowski v. Osantowski, 298 Neb. 339, 904 N.W.2d 251 (2017).

2 Id.

3 Id.

4 Id.
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WESTWOOD v. DARNELL

Cite as 299 Neb. 612

[5-7] The purpose of a property division is to distribute the 

marital assets equitably between the parties.5 Under § 42-365, 

the equitable division of property is a three-step process. The 

first step is to classify the parties’ property as marital or nonmarital. The second step is to value the marital assets and marital liabilities of the parties. The third step is to calculate and 

divide the net marital estate between the parties in accordance 

with the principles contained in § 42-365.6 The ultimate test 

in determining the appropriateness of the division of property 

is fairness and reasonableness as determined by the facts of 

each case.7

[8-10] The burden of proof to show that property is nonmarital remains with the person making the claim.8

 As a 

general rule, all property accumulated and acquired by either 

party during the marriage is part of the marital estate, unless 

it falls within an exception to the general rule.9 Such exceptions include property accumulated and acquired through gift 

or inheritance.10

Westwood relies on Lisec v. Lisec11 to support her contention that the money she withdrew from her retirement account 

maintained its status as her separate property. In Lisec, the wife 

argued that she was entitled to proceeds received from the sale 

of the marital home, because she provided the downpayment 

for the home from nonmarital funds. Specifically, the wife had 

received a gift of money from her mother, which she deposited 

into the parties’ joint checking account and then used to make 

5 Neb. Rev. Stat. § 42-365 (Reissue 2016).

6 Gangwish v. Gangwish, 267 Neb. 901, 678 N.W.2d 503 (2004).

7 Id.

8 Id.

9 Id.

10 Id.

11 Lisec v. Lisec, 24 Neb. App. 572, 894 N.W.2d 350 (2017).
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WESTWOOD v. DARNELL

Cite as 299 Neb. 612

the downpayment on the home. The wife argued that these 

funds retained their identity as gifted funds.

The Nebraska Court of Appeals affirmed the district court’s 

conclusion that the proceeds should be considered marital 

property, noting that the home was placed in both parties’ 

names and that the settlement agreement the parties entered 

explicitly provided that jointly titled property was to be considered marital property.

Westwood argues that the Court of Appeals’ decision was 

premised on the settlement agreement; otherwise, the house 

proceeds would have been considered nonmarital property. 

Thus, in her case, because there was not a settlement agreement providing as much with regard to these retirement funds, 

the funds would be considered nonmarital even after their 

deposit in the parties’ joint account.

Westwood’s contention with respect to the funds withdrawn from her retirement account is without merit. As an 

initial matter, Lisec is inapposite. Gifts and inheritances, 

even when received during the marriage, are presumed to be 

nonmarital. But retirement funds are not. Rather, retirement 

benefits earned during a parties’ marriage are considered to be 

marital property; only those benefits earned prior to marriage 

would be considered to be nonmarital.12 Westwood provides 

no authority to support the contention that retirement funds 

are converted into separate property after being withdrawn 

from a retirement account.

The burden is on Westwood to show that the funds in question are nonmarital. She has not met this burden. As noted, 

Westwood directs us to no authority suggesting that such 

funds are presumed to be nonmarital. Nor did Westwood present sufficient evidence to show that the funds withdrawn 

were her nonmarital property earned prior to marriage and 

not benefits earned during the marriage. Finally, the funds 

12 Lorenzen v. Lorenzen, 294 Neb. 204, 883 N.W.2d 292 (2016).
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WESTWOOD v. DARNELL

Cite as 299 Neb. 612

in question were withdrawn from Westwood’s retirement 

account, placed into the parties’ joint checking account, and 

used to pay marital debts. This supports the conclusion that 

the funds were considered marital property. Westwood’s first 

assignment of error is without merit.

In her second assignment of error, Westwood argues that 

the district court erred in not finding that Darnell was unjustly 

enriched by having her automobile loan paid off using the 

funds withdrawn from Westwood’s retirement account.

After clarifying Westwood’s contention during the oral 

argument for this appeal, we observe that the term “unjust 

enrichment” is used here in a colloquial sense: Westwood 

simply argues that the equities of this situation demand that 

the retirement proceeds be treated as separate property. And 

we have concluded that the burden to show that the funds 

were nonmarital was on Westwood and that she failed to meet 

this burden. As such, there is no merit to this assignment 

of error.

In her third and final assignment of error, Westwood contends that the district court erred in not considering that 

Darnell refused to file joint tax returns when dividing the marital estate. Westwood contends that a joint filing would have 

shifted the tax burden as to the withdrawal of funds from her 

retirement account.

[11] Ordinarily, a trial court in Nebraska should not consider the speculative tax consequences of its distribution 

orders unless it has ordered the immediate liquidation or sale 

of an asset or a party must sell an asset to satisfy a monetary 

judgment.13 In Bock v. Dalbey,

14 we were faced with the 

questions of (1) whether a district court can consider the tax 

consequences of one party’s refusal to file a joint return in 

dividing the marital estate, and (2) whether it has discretion 

13 Bock v. Dalbey, 283 Neb. 994, 815 N.W.2d 530 (2012).

14 Id.
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WESTWOOD v. DARNELL

Cite as 299 Neb. 612

to order the parties to file a joint return to preserve assets for 

the marital estate or to equalize its division of the estate. We 

generally held that a district court does not have discretion to 

order parties to file a joint tax return. We further noted:

Married individuals can elect whether to file a joint or 

separate return. For joint returns, the federal government 

taxes the income of a married couple in the aggregate. 

Filing jointly generally, but not always, produces substantial tax savings. But a “[couple] filing a joint return are 

jointly and severally liable for all tax for the taxable year 

(not merely the amount shown on the return), including 

interest, additions for negligence, and fraud penalties if 

applicable.” The right of election under the federal tax 

code and the possible exposure to liability have prompted 

several courts to hold that a trial court cannot order a 

party to file a joint return.

. . . .

Here, the statutory remedy is found in . . . § 42-365 

. . . . This statute authorizes a trial court to equitably 

distribute the marital estate according to what is fair and 

reasonable under the circumstances. Because § 42-365 is 

broad in its scope, we agree with the decisions of courts 

that hold a trial court may adjust its equitable division of 

the marital estate to account for the tax consequences of 

filing separate returns.

Therefore, under § 42-365, we hold that if a party seeking an equitable adjustment presents the court with the 

tax disadvantages of filing separate returns, a trial court 

may consider a party’s unreasonable refusal to file a joint 

return. Evidence of a tax disadvantage would normally 

include the parties’ calculated joint and separate returns 

for comparison.15

15 Id. at 996-97, 1001, 815 N.W.2d at 533, 536.
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WESTWOOD v. DARNELL

Cite as 299 Neb. 612

We do not opine today on whether evidence other than a 

completed joint tax return could serve as sufficient evidence 

of a tax disadvantage. In this instance, Westwood has failed to 

introduce any evidence, apart from her and Darnell’s separate 

tax returns and her testimony that the tax consequence would 

have been different, to support her contention regarding the 

consequences of a joint filing. Westwood’s third and final 

assignment of error is without merit.

CONCLUSION

The decision of the district court is affirmed.

Affirmed.

Wright, J., not participating.