Opinion ID: 1788790
Heading Depth: 1
Heading Rank: 9

Heading: Paul's Premarital Funds

Text: Shortly before their marriage, in 1988, the parties purchased a home in Grand Island, Nebraska. At trial, Paul testified that he paid $10,619.93 in personal, premarital funds for the downpayment on the home. He also presented evidence, in the form of check stubs from a check register, of his $10,619.93 contribution. The warranty deed for the house lists both Paul and Kimberley as grantees. After the parties were married, they purchased a new home and moved to Shelton, Nebraska. Thereafter, they found a buyer for their home in Grand Island and applied the proceeds from that sale to the payments on their new home. In 1998, the parties decided to build their current residence at the site of P.G. Farms' farming operation in rural Buffalo County. To do so, they sold their residence in Shelton and loaned the proceeds from that sale to P.G. Farms, from which P.G. Farms paid for the construction of their new, and current, residence. On appeal, Paul argues that the court erred by not giving him a credit for the $10,619.93 in personal, premarital funds that he expended for the downpayment on the parties' first home in Grand Island. The purpose of a property division is to distribute the marital assets equitably between the parties. Neb.Rev. Stat. § 42-365 (Reissue 1998); Claborn v. Claborn, 267 Neb. 201, 673 N.W.2d 533 (2004). 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. Mathews v. Mathews, 267 Neb. 604, 676 N.W.2d 42 (2004). The ultimate test in determining the appropriateness of the division of property is fairness and reasonableness as determined by the facts of each case. Tyma v. Tyma, 263 Neb. 873, 644 N.W.2d 139 (2002). On a number of occasions, we have examined similar factual circumstances. For example, in Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000), we modified a property settlement to credit the husband for making the downpayment on the parties' first marital home. In doing so, we recognized that when the husband made the downpayment, he used separate funds and was not yet married. Id. Therefore, because property which a party brings into the marriage is generally excluded from the marital estate, we determined that the husband was entitled to a credit for the downpayment he made on what became the parties' marital home. Id. Similarly, in Harris v. Harris, 261 Neb. 75, 621 N.W.2d 491 (2001), we determined that a husband who owned the parties' residence prior to the parties' marriage was entitled to receive a credit for the amount of equity in the house at the time of the parties' marriage. See, also, Schuman v. Schuman, 265 Neb. 459, 658 N.W.2d 30 (2003) (husband entitled to credit for downpayment he made on his business, when downpayment was made with separate funds, prior to his marriage). We note that in neither case did the husband and wife have joint title to the subject property prior to their marriage. However, we conclude that this is a distinction without a difference. In Schuman, supra, the husband inherited a sizeable amount of money from his mother during his marriage. After receiving the money, the husband took part of it and applied it toward the downpayment on an acreage that he and his wife took in joint title. During the dissolution action, the husband, claiming the deposit was paid for with separate property, sought a credit for the amount of money he expended on the downpayment. Id. The district court determined that the inherited money he used for the downpayment became marital property when the acreage was placed in joint tenancy with his wife and refused to give him a credit. Id. We reversed, concluding that the manner in which property is titled or transferred by the parties during the marriage does not restrict the trial court's ability to determine how the property should be divided in an action for dissolution of marriage. Id. Because the husband proved that $19,000 of the $20,000 downpayment for the acreage came from his separate funds, i.e., his inheritance, we determined he was entitled to a credit in that amount. Id. Similarly, in the instant case, the fact that the parties' home was jointly titled does not alter the fact that Paul provided documentary evidence to establish that he contributed $10,619.93 of personal funds toward its purchase prior to the parties' marriage. Under these circumstances, Paul proved that he made a sizeable contribution to what became a joint asset from his personal funds, and normally, he would be entitled to a credit in that amount. See Heald, supra (property which party brings into marriage is generally excluded from marital estate). To rule otherwise would be to presume that Paul's expenditure of personal, premarital funds was, in essence, a gift of $10,619.93 to Kimberley. This we will not do. See Schuman, supra (disapproving Gerard-Ley v. Ley, 5 Neb.App. 229, 558 N.W.2d 63 (1996)). Nonetheless, Paul is not entitled to a credit for the personal, premarital funds he expended on the parties' first home. The burden of proof to show that property is nonmarital remains with the person making the claim. Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000). At trial, Paul testified that the proceeds from the sale of the parties' first home were used to make payments on their second home. Paul also testified that the parties loaned the proceeds from the sale of their second home, as well as some personal funds, to P.G. Farms and that P.G. Farms paid for the construction of their current residence. Essentially, Paul claims that when the parties sold their first home, his separate, premarital contribution was used, along with the remaining proceeds from the sale, to make the payments on the parties' second home. When the parties sold their second home, Paul claims his separate, premarital contribution was loaned, along with the remaining proceeds from the sale, to P.G. Farms. Paul, however, did not present evidence that his premarital contribution retained its status as separate property after the parties sold their first home. More significantly, even if we were to assume Paul could trace his personal, premarital interest from the parties' first home to their second, Paul presented no evidence to document how his separate interest in the proceeds from the second home were in fact loaned to P.G. Farms. In fact, outside of Paul's testimony, the record is devoid of evidence which establishes that any of the proceeds from the sale of the parties' second home were in fact loaned to P.G. Farms. In the absence of such evidence, we cannot say that the trial court abused its discretion by not giving Paul a credit for his premarital contribution toward the downpayment on the parties' first home. See Rezac v. Rezac, 221 Neb. 516, 378 N.W.2d 196 (1985) (noting problems with tracing premarital property through disposition and reinvestment during marriage).