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MARSHALL v. MARSHALL

Cite as 298 Neb. 1

Amy Marshall, appellee, v. 

Brian W. Marshall, appellant.

___ N.W.2d ___

Filed October 13, 2017. No. S-15-035.

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

Attorney Fees: Appeal and Error. In an action for the dissolution of 

marriage, an appellate court reviews de novo on the record the trial 

court’s determinations of custody, child support, property division, 

alimony, and attorney fees; these determinations, however, are initially 

entrusted to the trial court’s discretion and will normally be affirmed 

absent an abuse of that discretion.

2. 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.

3. Evidence: Appeal and Error. When evidence is in conflict, an appellate court considers, and may give weight to, the fact that the trial judge 

heard and observed the witnesses and accepted one version of the facts 

rather than another.

4. Divorce: Equity. In Nebraska, dissolution of marriage cases are equitable in nature.

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

the marital assets equitably between the parties.

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

facts of each case. There is no mathematical formula by which property 

awards can be precisely determined.

7. Property Division: Appeal and Error. A division of property will not 

be disturbed on appeal unless it is patently unfair.

8. Property Division. 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 determine the marital liabilities 

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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.

9. ____. Any given property can constitute a mixture of marital and nonmarital interests; a portion of an asset can be marital property while 

another portion can be separate property.

10. ____. As a general rule, all property accumulated and acquired by either 

spouse during the marriage is part of the marital estate, unless it falls 

within an exception to the general rule.

11. ____. Compensation for purely personal losses is not in any sense a 

product of marital efforts. Compensation for an injury that a spouse 

has or will receive for pain, suffering, disfigurement, disability, or loss 

of postdivorce earning capacity should not equitably be included in the 

marital estate. On the other hand, compensation for past wages, medical expenses, and other items that compensate for the diminution of the 

marital estate should equitably be included in the marital estate as they 

properly replace losses of property created by marital partnership.

12. Property Division: Proof: Presumptions. The burden of proving that 

all or a portion of an injury settlement is nonmarital rests on the spouse 

making the claim. If the burden is not met, the presumption remains that 

the proceeds from the settlement are marital property.

13. Property Division. The rule announced in Parde v. Parde, 258 Neb. 

101, 602 N.W.2d 657 (1999), does not require either that a settlement 

agreement itself must categorize the nature of the compensation or that 

parties must present expert testimony as to how settlement proceeds 

should be allocated. Rather, Parde simply requires competent evidence 

as to the nature of and underlying reasons for the compensation.

14. Property Division: Proof. Where the evidence shows the settlement 

proceeds were inadequate to compensate the purely personal losses 

proved by the injured spouse, and also were inadequate to compensate 

loses to the marital estate, inequity would generally result from classifying all of the settlement proceeds as either marital or nonmarital.

15. Property Division. The principles announced in Parde v. Parde, 258 

Neb. 101, 602 N.W.2d 657 (1999), can be applied to settlement proceeds 

that have already been spent, so long as the nonmarital portion of the 

settlement proceeds can be sufficiently traced.

16. ____. Setting aside nonmarital property is simple if the spouse possesses the original asset, but can be problematic if the original asset no 

longer exists.

17. Property Division: Proof. Separate property becomes marital property 

by commingling if it is inextricably mixed with marital property or with 

the separate property of the other spouse. But if the separate property 

remains segregated or is traceable into its product, commingling does 
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not occur. The burden of proof rests with the party claiming that property is nonmarital.

18. Child Support: Rules of the Supreme Court. The Nebraska Child 

Support Guidelines provide that in calculating the amount of child support to be paid, the court must consider the total monthly income, which 

is defined as income of both parties derived from all sources, except 

all means-tested public assistance benefits which includes any earned 

income tax credit and payments received for children of prior marriages 

and includes income that could be acquired by the parties through reasonable efforts.

19. ____: ____. The Nebraska Supreme Court has not set forth a rigid definition of what constitutes income, but instead has relied upon a flexible, 

fact-specific inquiry that recognizes the wide variety of circumstances 

that may be present in child support cases.

20. Child Support: Taxation: Equity: Rules of the Supreme Court. 

Income for the purposes of calculating child support is not necessarily 

synonymous with taxable income. A flexible approach is taken in determining a person’s income for purposes of child support, because child 

support proceedings are, despite the child support guidelines, equitable 

in nature.

Petition for further review from the Court of Appeals, 

Moore, Chief Judge, and Irwin and Bishop, Judges, on appeal 

thereto from the District Court for Douglas County, Thomas A. 

Otepka, Judge. Judgment of Court of Appeals reversed, and 

cause remanded with directions.

Donald A. Roberts and Justin A. Roberts, of Lustgarten & 

Roberts, P.C., L.L.O., for appellant.

Anthony W. Liakos, of Govier, Katskee, Suing & Maxell, 

P.C., L.L.O., for appellee.

Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, 

Kelch, and Funke, JJ.

Stacy, J.

Amy Marshall petitions for further review of the Nebraska 

Court of Appeals’ opinion in Marshall v. Marshall.1 She 

1 Marshall v. Marshall, 24 Neb. App. 254, 885 N.W.2d 742 (2016).
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argues the Court of Appeals misapplied the principles of 

Parde v. Parde2 when determining how proceeds from a personal injury settlement should be classified in this dissolution 

action. She also argues the appellate court erred in recalculating child support, reversing the property division, and reversing the award of alimony. On further review, we reverse the 

decision of the Court of Appeals and remand the cause with 

directions to affirm the decree entered by the trial court.

I. FACTS

A complete recitation of the facts is set forth in the opinion 

of the Court of Appeals.3 We summarize here only those facts 

which are relevant to the issues on further review.

Amy and Brian W. Marshall married in 1993. Amy filed a 

complaint for dissolution in February 2013, and trial was held 

in October 2014. By that time, one of the parties’ two children had reached the age of majority, and the other was 18. 

Disputed issues at trial were child support, alimony, classification and division of assets and debts, and attorney fees.

1. Trial Evidence

Most of the evidence at trial focused on two issues: how 

to classify and allocate a personal injury settlement received 

during the marriage and how to calculate Brian’s total monthly 

income for purposes of child support and alimony. Given the 

factually intensive nature of these issues, we recite in some 

detail the evidence on which the district court relied.

(a) Personal Injury Settlement

In 2003, at age 34, Amy suffered a massive stroke. The 

stroke left her with permanent disabilities, including significant 

left-sided paralysis. Before the stroke, Amy had been taking 

the anti-inflammatory drug Vioxx on a regular basis. She did 

not have a prescription for Vioxx, but had been given free 

samples of the drug by a physician.

2 Parde v. Parde, 258 Neb. 101, 602 N.W.2d 657 (1999).

3 Marshall, supra note 1.
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Amy and Brian ultimately reached a settlement with Merck 

& Co., Inc. (Merck), the manufacturer of Vioxx. As part 

of the agreement, Amy and Brian executed a release of all 

claims. The release did not allocate the settlement proceeds 

to any particular claim or category of damages. The release 

contained a confidentiality provision limiting disclosure of 

the amount of the settlement payments; we thus will not 

reference the gross settlement amount in this opinion. It is 

sufficient to note that after deducting attorney fees and costs, 

Amy and Brian received net settlement proceeds totaling 

$330,621.14.

It is undisputed that the parties spent nearly all the settlement proceeds during their marriage. It is also undisputed that 

they were able to trace where most of the settlement proceeds 

were spent. As relevant to the issues on appeal, the evidence 

showed they used $84,268.83 to pay off the mortgage on the 

marital home and $90,123.36 to remodel the kitchen of that 

home. Another $5,211.90 was used for additional remodeling 

of the home. Brian put $20,000 into a new bank account in his 

name and used $33,333 to purchase a one-third interest in a 

business, “Elite Fitness.”

(i) Permanent Disability and 

Pain and Suffering

After the stroke, Amy was hospitalized for 1 week and then 

moved to a rehabilitation center for another 30 days. Once 

she was released to return home, Amy continued rehabilitation through physical therapy for approximately 4 years. Both 

Amy and her mother testified at trial about how the stroke 

affected her. The most complete explanation of Amy’s condition and limitations after the stroke came from her rehabilitation physician:

Despite a complete course of rehabilitation, [Amy] 

remains with rather significant left-sided paralysis. She 

has no significant functional use of the left upper extremity. She previously worked as an owner/operator of a hair 

salon. This stroke eliminated the functional use of her left 
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hand and ultimately she gave up her career and sold her 

salon. She has not been able to sustain reasonable work 

as a hairstylist since her stroke.

Functional tasks have become much more difficult . . 

. . [F]eeding is made more difficult as she is unable to cut 

her meat, prepare foods that require two hands and eating 

one-handed is simply clumsier and more difficult.

Likewise, dressing is performed entirely one-handed. 

She must select clothes from her wardrobe that do not 

have buttons or zippers. She also must perform toileting and bathing tasks one-handed and with adaptive 

equipment. These are performed more slowly and less 

thoroughly with her one-handed techniques. She is also 

unable to completely groom herself, particularly placing 

deodorant on her right side. She has difficulty grooming 

and bathing her right upper extremity with the paralyzed 

left arm.

[Amy] has the residuals of a neurogenic bladder post 

stroke. She has urinary urgency and must get to a bathroom more frequently than prior to her stroke. She is also 

more prone to the occasional bladder accident as a direct 

result of her stroke.

Exercise is performed more difficultly with her partially paralyzed left lower extremity. She is unable 

to ride a bicycle and is certainly unable to go jogging or ride an elliptical trainer. It is harder for her 

to achieve cardiovascular fitness under her hemiparetic 

circumstances.

Ambulation for [Amy] is clumsy and adaptive. She 

swings her left lower extremity forward in a circumferential pattern and has difficulty maintaining static stance 

on just her left lower extremity. She falls approximately 

once per month and has had [an] assortment of musculoskeletal bruises, sprains and strains as a result of 

her falls.

[Amy] requires lifelong treatment with an antiplatelet medication for her stroke. This slightly increases 
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her overall risk of cerebral hemorrhage and certainly 

increases the amount of bruising she suffers with normal 

everyday activities.

[Amy] at the present time [December 23, 2009,] is 

considered at maximum medical improvement in regard 

to her left hemiparetic stroke residuals. She has adapted 

her life to the near complete paralysis of her left upper 

extremity and the partial paralysis of her left lower 

extremity. Nonetheless, she has suffered significant functional impairments in her activities of daily living as a 

direct result of her stroke sequelae.

(ii) Past and Future 

Lost Earnings

Before the stroke, Amy co-owned a hair salon and earned 

approximately $43,580 per year. After the stroke, Amy was 

not able to work at all for several years, so she sold her interest in the hair salon. Later, she used proceeds from the sale of 

her salon to remodel a portion of the basement of the parties’ 

home into a hair salon. She eventually returned to work as a 

hairstylist, working about 3 hours a day, 2 to 3 days a week. 

She has 10 loyal clients, mostly family and friends, who are 

willing to assist her with styling. In 2013, the gross income 

from Amy’s home salon was $6,375 and her expenses were 

$7,000. Amy’s past lost earnings from the time of her stroke 

until the parties’ separation exceeded the amount of the Merck 

settlement proceeds. Her future lost earnings were estimated at 

over $1,133,000.

(b) Child Support

For purposes of calculating child support, the parties agreed 

on the amount of Amy’s total monthly income, but disagreed 

regarding the amount of Brian’s total monthly income. The 

evidence showed Brian had several sources of income, as well 

as in-kind benefits.

Brian works as the property manager for Marshall 

Enterprises, doing general property maintenance and upkeep. 
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He owns 49 percent of Marshall Enterprises, and his mother 

owns the remaining 51 percent. Marshall Enterprises manages properties purchased by Brian’s parents and held in trust. 

Brian testified that he receives a salary of $2,500 per month, 

but his 2013 tax returns did not show any income from wages 

or salary. In addition, Marshall Enterprises provides Brian a 

truck, pays for maintenance and insurance on the truck, pays 

his cell phone bill of approximately $270 per month, allows 

Brian to live rent free in one of its rental properties that rents 

for $1,000 per month, and provides health insurance for Brian 

and his family.

Brian also operates a snow removal business. He testified he usually earns “$10,000 or more” annually from his 

snow removal business. Brian’s income tax returns for 2009 

through 2013 reported net profits for this business of $11,184, 

$10,830, $15,958, $12,990, and $13,805, respectively. Also, 

Brian’s bank account statements from January to August 2014 

showed average monthly deposits of more than $7,400—well 

in excess of what he claimed to be earning from his property 

management and snow removal jobs—and he provided conflicting testimony regarding the source of those regular deposits. Brian denied having investment income, but his tax return 

reported capital gains from the sale of stock acquired during 

the marriage.

At trial, Amy argued the evidence showed Brian’s total 

monthly income was $11,041.25. Brian argued the evidence 

showed his total monthly income was $3,600. Generally, the 

disparity reflected the parties’ differing valuations of Brian’s 

in-kind benefits and their differing positions about the source 

of the regular deposits into his bank account.

2. Dissolution Decree

The district court entered a 34-page decree, with 17 pages 

of factual findings. We address only those portions of the 

decree that are relevant to consideration of the issues on further review.
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(a) Merck Settlement Proceeds

The district court’s decree acknowledged the parties’ primary disagreement over what portion, if any, of the Merck 

settlement proceeds were properly characterized as nonmarital. 

It then recited and applied the principles announced in Parde 

v. Parde.4 In that case, we held that settlement proceeds compensating a spouse for “purely personal losses” such as pain, 

suffering, disfigurement, disability, and postdivorce loss of 

earning capacity are not part of the marital estate, but that 

settlement proceeds for past wages, past medical expenses, 

and other items that compensate for diminution of the marital 

estate should be included in the marital estate.5 Under Parde, 

the burden of proving that all or a portion of the settlement is 

nonmarital rests on the spouse making the claim; if the burden 

is not met, the settlement proceeds are presumed to be marital property.6

The district court noted that, like the settlement at issue in 

Parde, the Merck settlement “was silent on allocation” of the 

settlement proceeds. But the court went on to find:

Notwithstanding [the failure to allocate], the Court, as the 

trier of fact and judge of the credibility of the witnesses, 

had an opportunity, over two days of trial, to not only 

see and hear Amy testify but [to] see how profoundly 

and permanently she has been affected and disabled by 

the massive stroke she sustained at such an early age 

[and] Brian . . . is now seeking to receive credit for half 

of the personal injury settlement of $330,621.14. The 

Court did not need the settlement documents . . . to see 

and appreciate the serious nature of Amy’s permanent 

injuries. The settlement does not come close to compensating Amy for her future pain, suffering, disfigurement, 

[and] disability.

4 Parde, supra note 2.

5 Id. at 109, 602 N.W.2d at 663.

6 Parde, supra note 2.
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The district court did not make an express finding allocating a certain percentage of the settlement proceeds as either 

marital or nonmarital. Instead, after making factual findings 

tracing the Merck settlement proceeds to several marital assets, 

the court divided those assets between the parties and, in valuing the assets, awarded a credit for nonmarital funds invested 

in that asset. Specifically, the court found that $179,604 of the 

Merck settlement proceeds had been used to pay off the mortgage and remodel the marital home. The court then awarded 

Amy the marital home, valued at $348,600, and gave her a 

credit of $179,604 against the value of the property to reflect 

her nonmarital share of the settlement proceeds.

The court took a similar approach with Brian. It found that 

he opened a bank account with $20,000 from the personal 

injury settlement and, by the time of trial, had spent the account 

down to $600. The court awarded Brian the account “as credit 

against his derivative or marital claim to the settlement proceeds.” The court also found that Brian used $37,333.33 of 

the personal injury settlement to purchase an interest in Elite 

Fitness. The court awarded that business investment to Brian 

“as a credit against his derivative or marital claim to the settlement proceeds.”

(b) Division of Marital 

Assets and Debts

Ultimately, the court calculated and divided the marital 

estate such that Amy received the marital home and her personal vehicle; Brian received a rental home, two trucks and 

two boats, his interest in Elite Fitness, and his 49-percent interest in Marshall Enterprises. The parties were each awarded the 

bank accounts in their own names, and the joint accounts were 

divided equally. The court also divided equally the cash value 

of various life insurance policies held by Brian. No equalization payment was ordered.

(c) Child Support

The court’s decree noted the significant disparity in the 

parties’ proposed child support calculations and described the 
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evidence regarding Brian’s income as “confounding and at 

times conflicting.” Nearly two pages of the court’s factual 

findings were devoted to reciting what the court described as a 

“few, but certainly not all, examples” of Brian’s contradictory 

evidence regarding his income and investments.

Ultimately, the court arrived at Brian’s total monthly income 

by splitting the difference between the parties’ suggested 

income calculations for Brian and adjusting the figure downward by several hundred dollars. The court explained that 

its decision to split the difference was based on the conflicting nature of the evidence, the best interests of the child and 

her age (18), and the equities of the situation. Using a total 

monthly income figure for Brian of $7,000, Brian was ordered 

to pay $935 per month in child support.

(d) Alimony

After reciting and analyzing the factors set out in Neb. 

Rev. Stat. § 42-365 (Reissue 2016), the district court ordered 

Brian to pay Amy alimony of $2,000 per month for a period of 

21 years.

3. Court of Appeals’ Decision

Brian appealed the decree. As relevant to this appeal, he 

assigned error to the district court’s (1) classification and division of the marital estate, including classifying any portion 

of the settlement proceeds as nonmarital; (2) calculation of 

Brian’s income for child support purposes; and (3) award of 

alimony. In a split decision, the Court of Appeals affirmed in 

part, and in part reversed and remanded with directions.

(a) Settlement Proceeds

The Court of Appeals found that Amy “failed to sufficiently 

demonstrate that any portion of the settlement proceeds were 

nonmarital property.”7 It reasoned:

While it is clear that Amy’s stroke has left her with 

serious physical impairments, it is also clear that her 

7 Marshall, supra note 1, 24 Neb. App. at 258-59, 885 N.W.2d at 747.
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stroke resulted in a great reduction in the value of the 

marital estate. The settlement proceeds received from 

Merck were simply not enough to cover all of the damages incurred by the parties. And, Amy simply failed 

to prove that any portion of the settlement proceeds 

were specifically allocated to her purely personal losses. 

In particular, Amy did not present any evidence which 

showed that 54 percent of the settlement proceeds were 

her nonmarital property. Thus, it is not clear how the 

district court determined that the proceeds should be 

broken down such that Amy received 54 percent of the 

proceeds as her nonmarital property; Brian received 12.5 

percent of the proceeds as his nonmarital property; and 

the remaining 33.5 percent of the proceeds stayed in 

the marital estate. Without specific proof about how the 

settlement proceeds should be broken down, the presumption remains that all of the proceeds from the personal 

injury settlement are marital property. The district court 

erred in arbitrarily setting aside any portion of the settlement proceeds as nonmarital property. The entirety of the 

proceeds should be included in the marital estate.8

In reaching this conclusion, the Court of Appeals emphasized that the settlement proceeds were inadequate to compensate the marital estate for the income Amy lost after her stroke 

and before the parties separated. It reasoned:

Evidence presented at trial revealed that prior to Amy’s 

stroke, she worked full time as a hairdresser . . . . Her 

annual wages for this employment totaled approximately 

$43,580. After Amy’s stroke, she is essentially unable to 

work as a hairdresser. She now earns a negligible amount 

of money working only a few hours a week. Accordingly, 

it is clear that the marital estate was greatly diminished 

as a result of Amy’s lost wages. In fact, Amy’s lost 

wages from the time of her stroke in 2003 through the 

8 Id. at 263-64, 885 N.W.2d at 750.
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times of the parties’ separation 10 years later in 2013 

totaled more than $100,000 over the entirety of the settlement proceeds.9

Because it reversed the district court’s decision to exclude 

portions of the personal injury settlement from the marital 

estate, the Court of Appeals remanded the matter to the district 

court to recalculate the value of the marital estate and to reconsider the equitable division of the marital assets.

(b) Child Support

The Court of Appeals found the district court erred in using 

$7,000 as Brian’s monthly income for purposes of calculating 

child support. It found that Amy’s proposed monthly income 

figure for Brian was not supported by the record and therefore 

concluded it was not reasonable for the district court to “‘split 

the difference’” between Amy’s and Brian’s proposed figures 

when determining Brian’s monthly income.10 The Court of 

Appeals recalculated Brian’s monthly income based on its de 

novo review of the evidence, and it found his monthly income 

was $5,864.20, which it rounded up to $6,000. It then directed 

the district court, on remand, to recalculate child support using 

$6,000 as Brian’s monthly income figure.

(c) Alimony

The Court of Appeals found no abuse of discretion in ordering Brian to pay alimony of $2,000 per month for 21 years. 

However, because it was remanding the matter to the district 

court to recalculate and divide the marital estate and to recalculate Brian’s child support, it reversed the alimony award as 

well, recognizing that when the district court performed these 

recalculations, its determination regarding appropriate alimony 

may be affected. As such, the Court of Appeals directed 

the district court on remand to “reconsider the issue of alimony in light of the changed circumstances resulting from 

9 Id. at 263, 885 N.W.2d at 750.

10 Id. at 267, 885 N.W.2d at 752.
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the recalculation of both the marital estate and Brian’s current income.”11

4. Matters Before Court

on Further Review

Both parties have assigned error on further review, but only 

Amy’s assignments are properly before us. Neb. Ct. R. App. 

P. § 2-102(F)(1) (rev. 2015) requires that a petition for further 

review and memorandum brief “must be filed within 30 days 

after the release of the opinion of the Court of Appeals or the 

entry of the order of the Court of Appeals finally disposing of 

the appeal, whichever occurs later.”

The Court of Appeals’ opinion was released August 16, 

2016. Amy timely filed for further review within 30 days of 

that date, and we granted her petition. Brian, however, did 

not petition for further review within 30 days of August 16. 

Instead, after Amy’s petition was granted, he filed a brief 

opposing the assignments Amy raised on further review and 

purporting to cross-petition for further review to assign errors 

of his own. This purported cross-petition was out of time. As 

such, further review will be limited to the assignments raised 

by Amy.

II. ASSIGNMENTS OF ERROR

Amy assigns the Court of Appeals erred in (1) determining 

that the entirety of the settlement proceeds should be included 

in the marital estate, (2) remanding the matter to the district 

court for recalculation of the value of the marital estate and 

redistribution of the assets and debts, (3) reversing the district 

court’s award of alimony, and (4) remanding the matter for 

recalculation of Brian’s child support obligation.

III. STANDARD OF REVIEW

[1] In an action for the dissolution of marriage, an appellate court reviews de novo on the record the trial court’s 

11 Id. at 273-74, 885 N.W.2d at 756.
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determinations of custody, child support, property division, 

alimony, and attorney fees; these determinations, however, are 

initially entrusted to the trial court’s discretion and will normally be affirmed absent an abuse of that discretion.12

[2] 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.13

[3] When evidence is in conflict, an appellate court considers, and may give weight to, the fact that the trial judge heard 

and observed the witnesses and accepted one version of the 

facts rather than another.14

IV. ANALYSIS

1. Classification of

Settlement Proceeds

The primary issue in this appeal is whether the trial court 

erred in classifying $179,604 of the settlement proceeds as 

Amy’s nonmarital property and dividing the parties’ assets 

based on that classification. Before directly addressing that 

issue, we set out the general principles that guide our analysis.

[4-7] In Nebraska, dissolution of marriage cases are equitable in nature.15 The purpose of a property division is to distribute the marital assets equitably between the parties.16 The 

ultimate test for determining the appropriateness of the division of property is fairness and reasonableness as determined 

by the facts of each case.17 There is no mathematical formula 

by which property awards can be precisely determined.18 A 

12 Donald v. Donald, 296 Neb. 123, 892 N.W.2d 100 (2017).

13 Bergmeier v. Bergmeier, 296 Neb. 440, 894 N.W.2d 266 (2017).

14 Erin W. v. Charissa W., 297 Neb. 143, 897 N.W.2d 858 (2017).

15 Laschanzky v. Laschanzky, 246 Neb. 705, 523 N.W.2d 29 (1994).

16 § 42-365.

17 Meints v. Meints, 258 Neb. 1017, 608 N.W.2d 564 (2000).

18 See Thiltges v. Thiltges, 247 Neb. 371, 527 N.W.2d 853 (1995).
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division of property will not be disturbed on appeal unless it is 

patently unfair.19 As we stated in Parde v. Parde,

20 “In equity, 

there is rarely one tidy answer that fits every size and type of 

problem that courts are called upon to resolve.”

[8,9] Under § 42-365, the equitable division of property is 

a three-step process.21 The first step is to classify the parties’ 

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

the marital assets and determine the 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 § 42-365.22 We have recognized that any given 

property can constitute a mixture of marital and nonmarital 

interests; a portion of an asset can be marital property while 

another portion can be separate property.23

[10] As a general rule, all property accumulated and acquired 

by either spouse during the marriage is part of the marital 

estate, unless it falls within an exception to the general rule.24

In the instant case, Amy relies on the exception for that portion of personal injury settlement proceeds which compensate 

a spouse for his or her “purely personal losses.”25

Amy argues the trial court did not abuse its discretion in 

classifying and allocating the personal injury settlement proceeds, and she claims the Court of Appeals erred in finding 

there was a failure of proof. We agree, and begin our analysis 

with a discussion of the seminal case, Parde v. Parde.

In Parde, the husband was injured on the job during 

the marriage and ultimately received a settlement from his 

19 See Heser v. Heser, 231 Neb. 928, 438 N.W.2d 795 (1989).

20 Parde, supra note 2, 258 Neb. at 108, 602 N.W.2d at 662.

21 Stephens v. Stephens, 297 Neb. 188, 899 N.W.2d 582 (2017); Despain v. 

Despain, 290 Neb. 32, 858 N.W.2d 566 (2015).

22 Id.

23 Stephens, supra note 21.

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

25 See Parde, supra note 2, 258 Neb. at 109, 602 N.W.2d at 663.
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employer. Part of the settlement provided a cash payment, and 

part required the employer to fund an annuity which had not 

yet come due when the parties divorced. By that time, the cash 

portion of the settlement had been spent and was reflected in 

the assets of the parties; those assets were divided pursuant to 

the parties’ settlement agreement. But a primary issue during 

the dissolution proceedings was whether the future annuity 

should be included or excluded from the marital estate. The 

district court found the annuity should be classified as marital 

property, and the husband appealed. The Court of Appeals 

reversed, finding the trial court had abused its discretion in 

failing to exclude the annuity as nonmarital property. We 

granted further review to clarify what we characterized as 

an “unnecessarily . . . muddled area of the law—determining 

which portions of an injured spouse’s personal injury settlement should be included in the marital estate for purposes of 

property division.26

[11,12] We observed there are two general approaches to 

the issue: the mechanical approach and the analytic approach. 

Under the mechanical approach, applied by a minority of jurisdictions, personal injury awards are treated entirely as marital property. Under the analytic approach, courts analyze the 

nature and underlying reasons for the compensation, and classify it accordingly. We found the analytic approach to be more 

consistent with the basic rule that the marital estate should 

include only property created by the marital partnership, and 

we adopted that approach. We explained:

Compensation for purely personal losses is not in any 

sense a product of marital efforts. We, therefore, hold 

that compensation for an injury that a spouse has or will 

receive for pain, suffering, disfigurement, disability, or 

loss of postdivorce earning capacity should not equitably be included in the marital estate. On the other hand, 

compensation for past wages, medical expenses, and other 

26 Id. at 106, 602 N.W.2d at 661.
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items that compensate for the diminution of the marital 

estate should equitably be included in the marital estate 

as they properly replace losses of property created by 

marital partnership.27

Parde emphasized that the burden of proving that all or a 

portion of the settlement is nonmarital rests on the spouse 

making the claim.28 If the burden is not met, the presumption remains that the proceeds from the settlement are marital property.

In Parde, we applied the analytic approach and concluded 

that the cash portion of the settlement, which had been spent 

and was reflected in the parties’ assets, more than adequately 

compensated the marital estate for any wages the husband 

lost during the marriage. We further held that the district 

court abused its discretion in classifying the annuity as marital. We rejected the wife’s argument that the husband had 

failed to meet his burden of proof because he had not offered 

“direct evidence” establishing that the annuity “carried a specific designation showing it was for a nonmarital purpose.”29

We explained:

While the husband’s evidence did not consist of a settlement document with a tidy breakdown of each dollar of 

the settlement into well-defined categories, the testimony 

. . . when considered with the language of the Release 

itself and the settlement as a whole, proved what portion 

of the entire settlement is to be reasonably considered 

as lost wages during the marriage and, thus, as a marital 

asset. By proving what portion of the entire settlement 

should be considered as a marital asset, the husband has 

necessarily proved what portion could properly be viewed 

as nonmarital property.30

27 Id. at 109-10, 602 N.W.2d at 663.

28 See id.

29 Id. at 112, 602 N.W.2d at 664-65.

30 Id. at 112-13, 602 N.W.2d at 665.
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Here, the parties do not dispute that the personal injury 

settlement with Merck represents compensation for any and all 

damages sustained by Amy, Brian, and the marital estate as a 

result of Amy’s stroke. But applying the principles announced 

in Parde to the instant appeal is complicated by two things: (1) 

the fact that the evidence shows the settlement proceeds were 

insufficient to compensate either Amy or the marital estate for 

the losses proved at trial and (2) the fact that the settlement 

proceeds have largely been spent. Although Parde did not 

directly address these complicating factors, we find nothing in 

the approach taken by the district court that was inconsistent 

with the general principles articulated in Parde.

The district court recognized that Amy had the burden, as 

the one claiming some or all of the settlement proceeds were 

nonmarital, to present evidence showing that all or a portion of 

the proceeds were specifically allocated to her purely personal 

losses.31 The first issue, therefore, is whether she presented 

evidence sufficient to meet this burden of proof.

The Court of Appeals held that Amy “simply failed to 

prove that any portion of the settlement proceeds were specifically allocated to her purely personal losses.”32 Our de 

novo review of the record leads us to a different conclusion. Amy presented her own testimony, testimony from her 

mother, evidence from her treating physician as to the nature 

and extent of her physical injuries, and evidence of future 

lost earnings. The trial court found this evidence credible 

and made an express finding that the settlement proceeds 

did “not come close to compensating Amy” for her purely 

personal losses. All of this evidence demonstrated that Amy 

has sustained a significant amount of uniquely personal loss 

and implicitly demonstrated that a significant portion of the 

settlement proceeds was necessarily allocated to compensate 

her for this loss.

31 See id.

32 Marshall, supra note 1, 24 Neb. App. at 263, 885 N.W.2d at 750.
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[13] We take this opportunity to clarify that the rule 

announced in Parde does not require either that the settlement 

agreement itself must categorize the nature of the compensation or that parties must present expert testimony as to how 

settlement proceeds should be allocated. Rather, Parde simply 

requires competent evidence as to the nature of and underlying reasons for the compensation. It is not at all uncommon 

for personal injury settlement agreements to be silent regarding allocation, and we soundly reject any suggestion that such 

silence compels the conclusion that the entire settlement must 

be classified as marital property.

We also reject any suggestion that the analytic approach 

adopted in Parde requires testimony or evidence of a particular mathematical breakdown of the settlement proceeds. 

District court judges are well acquainted with personal injury 

evidence and damages and are called upon regularly to determine and allocate such damages. Indeed, case law from other 

jurisdictions indicates that neither mathematical allocation of 

settlement proceeds nor expert testimony as to allocation is 

required and that trial courts instead allocate damages based on 

personal testimony and other evidence.33 As the Supreme Court 

of Alaska has stated:

Although mathematically exact allocation of [a personal 

injury] award may not be possible, we are confident 

of the ability of the trial court to make a reasonable 

apportionment. Like the Supreme Court of New Jersey, 

“[w]e do not expect that the allocation of such awards 

will present any serious problems. Trial courts are used 

to allocating and tracing assets in equitable distribution cases.”34

33 See, Tramel v. Tramel, 740 So. 2d 286 (Miss. 1999); Dalessio v. Dalessio, 

409 Mass. 821, 570 N.E.2d 139 (1991); Bandow v. Bandow, 794 P.2d 1346 

(Alaska 1990).

34 Bandow, supra note 33, 794 P.2d at 1350, quoting Landwehr v. Landwehr, 

111 N.J. 491, 545 A.2d 738 (1988).
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[14] We acknowledge, as did both the lower court and 

the Court of Appeals, that the total amount of compensation 

here was inadequate to fully compensate either Amy or the 

marital estate for the full extent of losses suffered. That does 

not mean, however, that either all or none of the settlement 

proceeds must be classified as nonmarital. Indeed, where, as 

here, the evidence shows the settlement proceeds were inadequate to compensate the purely personal losses proved by the 

injured spouse, and also were inadequate to compensate loses 

to the marital estate, inequity would generally result from 

classifying all of the settlement proceeds as either marital 

or nonmarital.

We have recognized that any given property can constitute 

a mixture of marital and nonmarital interests; a portion of 

an asset can be marital property while another portion can 

be separate property.35 As our recitation of the facts demonstrates, there was substantial evidence presented to the district 

court that the stroke caused Amy significant personal pain, 

suffering, disfigurement, disability, and loss of postdivorce 

earning capacity. While the marital estate also suffered significant loss due to Amy’s lost wages, we cannot find that the 

district court abused its discretion in classifying slightly more 

than one-half of the settlement proceeds as Amy’s nonmarital property.

[15-17] This case also demonstrates that the principles 

announced in Parde can be applied to settlement proceeds that 

have already been spent, so long as the nonmarital portion of 

the settlement proceeds can be sufficiently traced. We have 

recognized that setting aside nonmarital property is simple if 

the spouse possesses the original asset, but can be problematic if the original asset no longer exists.36 Separate property 

becomes marital property by commingling if it is inextricably 

mixed with marital property or with the separate property of 

35 Stephens, supra note 21.

36 Brozek v. Brozek, 292 Neb. 681, 874 N.W.2d 17 (2016).
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the other spouse.37 But if the separate property remains segregated or is traceable into its product, commingling does not 

occur.38 The burden of proof rests with the party claiming that 

property is nonmarital.39

Here, that burden was met. The evidence was undisputed 

that $179,604 of the settlement proceeds was used to pay off 

the mortgage and remodel the marital home. After tracing 

that portion of the settlement proceeds to the marital home, 

the district court awarded Amy the marital home, valued 

at $348,600, and gave her a credit of $179,604 against the 

value of the property to reflect her nonmarital share of the 

settlement proceeds. This approach was equitable, consistent 

with the principles articulated in Parde, and supported by 

the evidence.

For all of these reasons, we find the trial court did not 

abuse its discretion in classifying and allocating Amy’s nonmarital share of the settlement proceeds in the context of 

dividing the marital estate. To the extent the Court of Appeals 

concluded otherwise, we reverse.

2. Child Support

The Court of Appeals found the district court abused its 

discretion in determining Brian’s total monthly income was 

$7,000 for purposes of the child support calculation. Based on 

its de novo review of the evidence, the Court of Appeals determined Brian’s total monthly income was $6,000 and remanded 

the matter to the district court with instructions to recalculate 

child support using the lower monthly income figure. On 

further review, we find no abuse of discretion in the district 

court’s calculation of Brian’s monthly income.

[18] The Nebraska Child Support Guidelines provide that in 

calculating the amount of child support to be paid, the court 

37 Id.

38 Id.

39 Id.
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must consider the total monthly income, which is defined as 

“income of both parties derived from all sources, except all 

means-tested public assistance benefits which includes any 

earned income tax credit and payments received for children 

of prior marriages” and includes income that could be acquired 

by the parties through reasonable efforts.40

[19,20] We have not set forth a rigid definition of what 

constitutes income, but instead we have relied upon a flexible, fact-specific inquiry that recognizes the wide variety of 

circumstances that may be present in child support cases.41

Thus, income for the purposes of calculating child support is 

not necessarily synonymous with taxable income.42 We take 

this flexible approach in determining a person’s “income” for 

purposes of child support, because child support proceedings 

are, despite the child support guidelines, equitable in nature.43

Thus, a court is allowed, for example, to add “in-kind” benefits, derived from an employer or other third party, to a 

party’s income.44

The decree described the evidence of Brian’s income as 

“confounding and at times conflicting.” Our de novo review 

of the record supports that characterization. The evidence 

adduced at trial could conceivably support a variety of reasonable monthly income calculations, but the trial court ultimately 

decided: “Based upon the evidence and the conflicting nature 

of same, [the minor’s] age, her best interests, the equities of 

the situation and the need to later address alimony, the Court 

. . . split[s] the difference between the [parties’] suggested 

monthly gross incomes for Brian . . . and adjust[s] that difference downward slightly . . . .”

40 Neb. Ct. R. § 4-204 (rev. 2016).

41 Gangwish, supra note 24; Workman v. Workman, 262 Neb. 373, 632 

N.W.2d 286 (2001).

42 Gangwish, supra note 24.

43 Id.

44 Workman, supra note 41.
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While we do not generally endorse the practice of splitting the difference in making child support calculations, we 

acknowledge the practice of splitting the difference is used 

occasionally by trial courts, sitting in equity, when there is a 

conflict in the evidence.45 But regardless of the rationale utilized by the trial court, our de novo review of the record does 

not show an abuse of discretion in using a figure of $7,000 as 

Brian’s monthly income.

The Court of Appeals engaged in an exhaustive de novo 

review of the record and determined it supported a finding that 

Brian’s monthly income was $6,000. In doing so, however, it 

relied extensively on Brian’s testimony and evidence produced 

by Brian with respect to his monthly income. Although our 

review is de novo, we cannot discount that the trial judge, who 

was in the best position to observe the witnesses’ demeanor 

and credibility, expressed significant concern about Brian’s 

credibility and the contradictory nature of the evidence Brian 

presented. When evidence is in conflict, an appellate court 

considers, and may give weight to, the fact that the trial judge 

heard and observed the witnesses and accepted one version of 

the facts rather than another.46 In light of the conflicting nature 

of the evidence, the trial court’s concerns about Brian’s credibility, and particularly because the minor child was 18 at the 

time of trial and the support order was to last only a matter of 

months, we cannot find the trial court abused its discretion in 

finding that Brian’s total monthly income for child support purposes was $7,000. We therefore reverse the Court of Appeals’ 

decision on this issue.

3. Alimony

Finally, although the Court of Appeals found no abuse of 

discretion in the district court’s alimony award, it reversed the 

award, because it was remanding the matter for recalculation 

45 See, Shald v. Shald, 216 Neb. 897, 346 N.W.2d 406 (1984); Sneckenberg 

v. Sneckenberg, 9 Neb. App. 609, 616 N.W.2d 68 (2000).

46 Erin W., supra note 14.
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and division of the marital estate and for recalculation of child 

support and wanted the trial court to have an opportunity to 

reconsider the issue of alimony as well. Because we conclude on further review that the district court’s decree should 

be affirmed, there is no need to reconsider alimony, and this 

aspect of the Court of Appeals’ opinion is reversed as moot.

V. CONCLUSION

For the foregoing reasons, we find no abuse of discretion 

in the trial court’s classification and allocation of the personal 

injury award or in the trial court’s determination of Brian’s 

monthly income for purposes of calculating child support. We 

therefore reverse the Court of Appeals’ decision and remand 

the matter with directions to affirm the decree of the district court.

Reversed and remanded with directions.