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Nebraska Advance She

291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

Dale J. Coufal, appellant, 

Lavon M. Coufal, appell

___ N.W.2d ___

Filed July 17, 2015. No. S-14-591.

1. Divorce: Appeal and Error. In actions for dissolution of marriage, 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.

2. Judges: Words and Phrases. A judicial abuse of discretion exists when 

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

Attorney Fees: Appeal and Error. In actions for dissolution of marriage, an appellate court reviews the trial court’s determinations regarding custody, child support, division of property, alimony, and attorney 

fees de novo on the record to determine whether there has been an abuse 

of discretion.

4. Divorce: Property Division: Pensions. In dissolution actions, district 

courts have broad discretion in valuing pension rights and dividing such 

rights between the parties.

5. Divorce: Property Division. In a divorce action, the purpose of a 

property division is to distribute the marital assets equitably between 

the parties.

6. ____: ____. As a general rule, all property accumulated and acquired by 

either spouse during a marriage is part of the marital estate.

7. Divorce: Property Division: Pensions. Only that portion of a pension 

which is earned during the marriage is part of the marital estate.

8. ____: ____: ____. Generally, amounts added to and interest accrued on 

such pensions or retirement accounts which have been earned during the 

marriage are part of the marital estate. Contributions to pensions before 

marriage or after dissolution are not assets of the marital estate.
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291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

Appeal from the District Court for Buffalo County: Willia

T. Wright, Judge. Affirmed in part, and in part reversed and

remanded with directions.

Kent A. Schroeder, of Ross, Schroeder & George, L.L.C., 

for appellant.

Gregory G. Jensen, P.C., L.L.O., for appellee.

Heavican, C.J., Wright, Connolly, Stephan, M

Miller-Lerman, and Cassel,

Wright, J.

NATURE OF CASE

This is an appeal from a decree of dissolution of marriage 

in which the district court included in the marital estate the 

increase in value of the premarital portion of the husband’s 

public employees’ retirement account. Prior to the marriage, 

the increase in value was fixed and guaranteed by statute, but it 

accrued during the marriage. The court found that the increase 

in value was “‘earned’ or accumulated during the marriage” 

and that it should be included in an equitable division of the 

marital estate pursuant to Neb. Rev. Stat. § 42-366(8) (Reissue 

2008). We find that the increase in value of the premarital 

portion of the husband’s retirement account was not the result 

of the efforts or contributions of either spouse and, therefore, 

was not earned during the marriage.

SCOPE OF REVIEW

[1,2] In actions for dissolution of marriage, 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. Molczyk v. Molczyk, 285 Neb. 96, 825 N.W.2d 435 

(2013). A judicial abuse of discretion exists when 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. Tyma v. Tyma, 263 Neb. 873, 

644 N.W.2d 139 (2002).
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Nebraska Advance She

291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

FACTS

Dale J. Coufal (Appellant) and Lavon M. Coufal (Appellee) 

were married on June 11, 2004. Each had one prior marriage, 

and no children were born during this marriage.

Appellant has been employed by the Nebraska Department 

of Roads since April 1986, including the time during the 

marriage. He participates in the Nebraska Public Employees 

Retirement Systems (NPERS), which is not a defined benefit 

plan that would apply to some state employees. Before the 

marriage, the balance of Appellant’s retirement account was 

$76,271.45. Under Neb. Rev. Stat. § 84-1301(17) (Reissue 

2014), members of NPERS are guaranteed a rate of return on 

their retirement plans of not less than 5 percent or the applicable federal midterm rate plus 1.5 percent. Appellant claimed 

that the premarital portion of the retirement account should be 

valued so as to include the statutorily guaranteed interest on 

the principal.

Appellant offered the testimony of David Rosenbaum as an 

expert witness for the purpose of establishing the present value 

of the premarital portion of Appellant’s retirement account. 

Rosenbaum has a Ph.D. in economics from the University 

of Wisconsin-Madison. He has been employed in various 

teaching and administrative positions with the University of 

Nebraska-Lincoln for almost 30 years and is the owner of an 

economic consulting firm. Rosenbaum testified that as of May 

6, 2013, the adjusted value of the premarital portion of the 

retirement account ($76,271.45) was $120,010.82. His calculation was based upon the statutory rate of return which the State 

must provide on the principal. After Rosenbaum determined 

his formulas, he verified with NPERS that his methodology 

was correct. The adjusted value of this part of Appellant’s 

retirement account is not disputed.

The district court issued a decree of dissolution on May 5, 

2014, in which it valued the retirement account at $219,830.07. 

The court concluded that the increased value of the premarital estate was accumulated and acquired during the course 

of the marriage through the joint efforts of the parties and 
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291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

that, therefore, it was part of the marital estate. The court 

found that the interest accruing on the premarital portion of 

the retirement account did not fit into any exception to the 

general rule that property acquired by either party during the 

marriage is included in the marital estate.

Appellant contends that the district court abused its discretion in including the interest accruing on the premarital portion of the retirement account as part of the marital estate. He 

asserts that because the increased value on the premarital principal of the retirement account was guaranteed by § 84-1301, 

it was not due to the joint efforts of the spouses and, therefore, 

was not “‘earned during the marriage.’” See brief for appellant at 4. We granted Appellant’s petition to bypass to address 

this issue.

ASSIGNMENTS OF ERROR

Appellant claims that the district court abused its discretion 

by not excluding from the marital estate the interest accrued 

on the nonmarital portion of the retirement account. Appellant 

asserts the court should have excluded the statutorily guaranteed appreciation of $43,739.37, because the increase resulted 

solely from the appreciation under § 84-1301 and was not the 

result of the joint efforts of the parties.

ANALYSIS

[3-5] Our reasoning and conclusion are specific to the facts 

presented in this case. In actions for dissolution of marriage, 

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. Molczyk v. Molczyk, 285 Neb. 96, 825 

N.W.2d 435 (2013). This standard of review applies to the 

trial court’s determinations regarding custody, child support, 

division of property, alimony, and attorney fees. See, Binder 

v. Binder, ante p. 255, ___ N.W.2d ___ (2015); Reed v. Reed, 

275 Neb. 87, 744 N.W.2d 444 (2008). In dissolution actions, 

district courts have broad discretion in valuing pension rights 

and dividing such rights between the parties. Tyma v. Tyma, 

263 Neb. 873, 644 N.W.2d 139 (2002). In a divorce action, 
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291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

the purpose of a property division is to distribute the marital 

assets equitably between the parties. Neb. Rev. Stat. § 42-365 

(Reissue 2008). Equitable property division under § 42-365 is 

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

property as marital or nonmarital. Tyma, supra.

In dissolution actions, § 42-366(8) confers upon the court 

the power to equitably divide the marital estate and to include 

any pension or retirement plans, annuities, and other deferred 

compensation as part of the marital estate.

If the parties fail to agree upon a property settlement 

which the court finds to be conscionable, the court shall 

order an equitable division of the marital estate. The court 

shall include as part of the marital estate, for purposes 

of the division of property at the time of dissolution, 

any pension plans, retirement plans, annuities, and other 

deferred compensation benefits owned by either party, 

whether vested or not vested.

Id.

[6-8] As a general rule, all property accumulated and 

acquired by either spouse during a marriage is part of the 

marital estate. Reed, supra. Applying this general rule to pensions, we have held that only that portion of a pension which 

is earned during the marriage is part of the marital estate. 

See Blaine v. Blaine, 275 Neb. 87, 744 N.W.2d 444 (2008). 

Generally, amounts added to and interest accrued on such pensions or retirement accounts which have been earned during 

the marriage are part of the marital estate. Contributions to 

pensions before marriage or after dissolution are not assets of 

the marital estate. See Shockley v. Shockley, 251 Neb. 896, 560 

N.W.2d 777 (1997).

In the case at bar, Appellant claims that the district court 

abused its discretion by including as part of the marital estate 

the increase in value of the premarital portion of the account. 

The question presented is whether the increase in value of the 

premarital portion of the retirement account should be considered as part of the marital estate.
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291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

Other courts have concluded that an increase in value of 

such property during the marriage is not a marital asset when 

it is not caused by marital efforts or funds. “Appreciation in 

separate property is marital property to the extent that it was 

caused by marital funds or marital efforts; otherwise, it remains 

separate property.” 1 Brett R. Turner, Equitable Distribution of 

Property § 5:54 at 546 (3d ed. 2005). As early as 1983, one 

annotation stated:

[C]ourts in the vast majority of cases in which the issue 

has arisen have held or recognized that an increase in 

value in the separate property of a spouse, not attributable in any manner to any contribution of funds, property, 

or effort by either of the spouses, constitutes separate 

property . . . .

Annot., 24 A.L.R.4th 453, 456-57 (1983).

Some courts have referred to this dichotomy in the appreciation of separate property as “active” appreciation versus “passive” appreciation. Some states have codified this principle. 

See, e.g., Ala. Code § 30-2-51(b)(2) (1998); Ark. Code Ann. 

§ 9-12-315(b)(5) (2008); Del. Code Ann. tit. 13, § 1513(b)(4) 

(2009); D.C. Code § 16-910(a) (2008); 750 Ill. Comp. Stat. 

Ann. 5/503(b)(2) (LexisNexis Cum. Supp. 2009); Me. Rev. 

Stat. Ann. tit. 19-A, § 953(2)(E) (Cum. Supp. 2004); Mo. 

Ann. Stat. § 452.330(5) (West 2003); N.Y. Dom. Rel. Law 

§ 236(B)(d)(3) (McKinney 2010).

In order to determine what portion of Appellant’s retirement 

account is nonmarital property, we examine to what extent the 

appreciation in the separate premarital portion of the retirement account was caused by the efforts of either spouse. In this 

context, we held that where appreciation of a wife’s separate 

asset was due principally to inflation and market forces and 

not to any “significant efforts” by the husband, the appreciation should not have been included in the marital estate. See 

Van Newkirk v. Van Newkirk, 212 Neb. 730, 734, 325 N.W.2d 

832, 834 (1982).

In Buche v. Buche, 228 Neb. 624, 423 N.W.2d 488 (1988), 

we held that certain shares of stock should not have been 
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COUFAL v. COUFAL

Cite as 291 Neb. 378

included in the marital estate, because the parties were married 3 years after the husband began receiving stock; neither 

spouse contributed money to acquire the stock; the wife did 

not contribute to the improvement or operation of the stock, 

nor significantly care for the property during the marriage; 

and the stock was readily identifiable and traceable to the 

husband. In these decisions, some level of indirect or direct 

effort was required by the nontitled spouse—not just inflation 

or market forces—in order to include the increase in value in 

the marital estate.

The instant case is analogous to having a certificate of 

deposit with a fixed rate of interest that was owned by one 

spouse before the marriage. Both the principal and interest 

remain separate property because the certificate of deposit was 

acquired before the marriage, though the full economic value 

is not realized until after the parties were married. There is no 

marital effort or contribution during the marriage that affects 

the accrual of interest on the certificate of deposit.

Similarly, the appreciation of the premarital portion of 

Appellant’s retirement account was guaranteed prior to the 

marriage. No effort from either spouse directly or indirectly 

affected the appreciation. The interest accrued solely by operation of § 84-1301. Therefore, the appreciation was not earned 

during the marriage by the joint efforts or contributions of the 

parties, because Appellant was legally entitled to the increase 

in value prior to the marriage.

Other courts have reached similar conclusions. In Baker 

v. Baker, 753 N.W.2d 644 (Minn. 2008), the Minnesota 

Supreme Court held that where a husband did not devote 

significant effort to managing his retirement funds and no 

significant effort was diverted from the marriage to generate 

the increase in the account, the appreciation in the nonmarital 

portion of the funds remained separate property. Similarly, 

a court in Illinois held that the value of a wife’s individual 

retirement account as of the date of marriage, and any subsequent appreciation in value of that amount, was the wife’s 

separate property upon dissolution of the marriage. But the 
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291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

amount contributed to the retirement account during the 

marriage, and any subsequent appreciation in value of that 

amount, constituted marital property. See In re Marriage of 

Raad, 301 Ill. App. 3d 683, 704 N.E.2d 964, 235 Ill. Dec. 

391 (1998).

In the case at bar, the district court concluded that the 

interest accumulated on the premarital portion of the retirement account was a form of marital income earned during 

the marriage by virtue of Appellant’s continued employment. 

Previously, this court has held that a spouse’s income which 

accumulates during the parties’ marriage is a marital asset. 

Harris v. Harris, 261 Neb. 75, 621 N.W.2d 491 (2001). In 

Davidson v. Davidson, 254 Neb. 656, 578 N.W.2d 848 (1998), 

we held that employee stock options and stock retention shares 

were acquired during the marriage through the husband’s 

employment during the marriage and were part of the marital estate.

However, in the present case, the increase in value of 

the premarital portion of Appellant’s retirement account was 

not contingent on Appellant’s continued employment with the 

State, but instead was guaranteed by statute prior to the marriage. The increase in value of the premarital portion of the 

account was not derived from contributions by the parties during the marriage.

We also reject the suggestion that the premarital funds in the 

retirement account were commingled and, therefore, should 

be treated as marital property. “‘[S]eparate property becomes 

marital property [by commingling] if inextricably mingled 

with marital property or with the separate property of the other 

spouse. If the separate property continues to be segregated or 

can be traced into its product, commingling does not occur 

. . . .’” Snodgrass v. Snodgrass, 295 S.W.3d 240, 256 (Tenn. 

2009). Such commingling occurred in Heald v. Heald, 259 

Neb. 604, 611 N.W.2d 598 (2000), where we set aside from 

the marital estate the amount of a downpayment made on 

the purchase of a home prior to the marriage, but not to any 
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291 Nebraska Report

COUFAL v. COUFAL

Cite as 291 Neb. 378

interest accrued on the amount because the mortgage payments 

were made by the parties during the marriage.

In the instant case, the increase in value of the premarital portion of the retirement account is readily identifiable 

and traceable to Appellant’s premarital portion of the retirement account.

Finally, we note that Rosenbaum’s calculation of the 

increase in value of the premarital portion of the retirement 

account included a present value date of May 6, 2013, which 

was neither the date the parties separated nor the date of the 

dissolution decree. Instead, May 6 was the date Rosenbaum 

issued his report, and the parties do not dispute the value of 

the premarital portion of the retirement fund as of that date, 

nor do they assert that an alternative date should have been 

used. Therefore, we conclude that the value of the nonmarital 

portion of Appellant’s retirement account should be valued as 

of May 6, 2013.

CONCLUSION

The district court abused its discretion by including as a 

marital asset the increase in value of the nonmarital portion of 

the retirement account. Such increase in value was not due to 

the efforts or contribution of marital funds by the parties during the marriage, and it was readily identifiable and traceable 

to the nonmarital portion of the account.

Therefore, we reverse the portion of the divorce decree that 

included the increase in value of the nonmarital portion of the 

retirement account as determined on May 6, 2013, and we 

remand the cause with directions to exclude this amount from 

the marital estate. In all other respects, the judgment of the 

district court is affirmed.

 Affirmed in part, and in part re

and remanded with direct