Court Opinion

ID: 9949691
Source: CourtListenerOpinion
Date Created: 2024-03-12 14:07:38.043015+00
Date Added: 2024-06-11T14:25:44.182883
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
03/12/2024 09:07 AM CDT

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                             Nebraska Court of Appeals Advance Sheets
                                  32 Nebraska Appellate Reports
                                                  KNAPP V. KNAPP
                                               Cite as 32 Neb. App. 669

                                        Nataliya Knapp, appellee, v.
                                         Leland Knapp, appellant.
                                                   ___ N.W.2d ___

                                         Filed March 5, 2024.    No. A-23-040.

                 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. Judges: Words and Phrases. A judicial abuse of discretion exists if the
                    reasons or rulings of a trial judge are clearly untenable, unfairly depriv-
                    ing a litigant of a substantial right and denying just results in matters
                    submitted for disposition.
                 3. Divorce: Property Division: Alimony. In dividing property and consid-
                    ering alimony upon a dissolution of marriage, a court should consider
                    four factors: (1) the circumstances of the parties, (2) the duration of the
                    marriage, (3) the history of contributions to the marriage, and (4) the
                    ability of the supported party to engage in gainful employment without
                    interfering with the interests of any minor children in the custody of
                    each party.
                 4. Divorce: Property Division. In addition to the specific criteria listed
                    in Neb. Rev. Stat. § 42-365 (Reissue 2016), a court should consider the
                    income and earning capacity of each party and the general equities of
                    the situation.
                 5. Alimony. The purpose of alimony is to provide for the continued main-
                    tenance or support of one party by the other when the relative economic
                    circumstances make it appropriate.
                 6. Alimony: Appeal and Error. In reviewing an alimony award, an appel-
                    late court does not determine whether it would have awarded the same
                    amount of alimony as did the trial court, but whether the trial court’s
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           Nebraska Court of Appeals Advance Sheets
                32 Nebraska Appellate Reports
                                KNAPP V. KNAPP
                             Cite as 32 Neb. App. 669

      award is untenable such as to deprive a party of a substantial right or
      just result. The ultimate criterion is one of reasonableness.
 7.   ____: ____. An appellate court is not inclined to disturb the trial court’s
      award of alimony unless it is patently unfair on the record.
 8.   Evidence: Appeal and Error. When evidence is in conflict, an appel-
      late 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.
 9.   Divorce: 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, setting
      aside the nonmarital property to the party who brought that property to
      the marriage. 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 con-
      tained in § 42-365.
10.   Property Division. As a general rule, a spouse should be awarded one-
      third to one-half of the marital estate, the polestar being fairness and
      reasonableness as determined by the facts of each case.
11.   Divorce: Property Division. Generally, all property accumulated and
      acquired by either spouse during a marriage is part of the marital estate.
12.   ____: ____. The marital estate does not include property that a spouse
      acquired before the marriage, or by gift or inheritance.
13.   Property Division. Any given property can constitute a mixture of mari-
      tal and nonmarital interests; a portion of an asset can be marital property
      while another portion can be separate property.
14.   ____. Setting aside nonmarital property is simple if the spouse pos-
      sesses the original asset, but can be problematic if the original asset no
      longer exists.
15.   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
      not occur.
16.   ____: ____. The burden of proof rests with the party claiming that prop-
      erty is nonmarital.
17.   Divorce: Property Division: Proof: Testimony. A nonmarital interest
      in property may be established by credible testimony.
18.   Trial: Witnesses: Evidence. Triers of fact have the right to test the
      credibility of witnesses by their self-interest and to weigh it against the
      evidence, or the lack thereof.
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          Nebraska Court of Appeals Advance Sheets
               32 Nebraska Appellate Reports
                              KNAPP V. KNAPP
                           Cite as 32 Neb. App. 669

19. Trial: Evidence. Evidence not directly contradicted is not necessarily
    binding on the triers of fact, and may be given no weight where it is
    inherently improbable, unreasonable, self-contradictory, or inconsistent
    with facts or circumstances in evidence.
20. Testimony: Proof. A party opting to rely upon his or her testimony
    alone does so at the risk of nonpersuasion.
21. Trial: Evidence: Appeal and Error. An appellate court will consider
    the fact that the trial court saw and heard the witnesses and observed
    their demeanor while testifying, and will give great weight to the trial
    court’s judgment as to credibility.
22. Employer and Employee. In most cases, the ostensible purpose of sev-
    erance pay is to provide a salary substitute for the worker while he or
    she searches for a new job.
23. Divorce: Property Division. If intended as deferred compensation for
    marital labor, severance pay is marital property; however, if intended
    to replace postdivorce earnings, such payments are classified as the
    worker’s separate property.
24. ____: ____. When classifying severance pay as marital or nonmarital, a
    court should determine the purpose of the severance pay. When sever-
    ance benefits constitute additional compensation for past work during
    the marriage or a replacement for lost marital pension rights, then the
    benefits are marital property. However, when severance benefits are
    compensation for lost postmarital wages, then they are separate, non-
    marital property.
25. Property Division: Taxes. Income tax liability incurred during the mar-
    riage is one of the accepted costs of producing marital income, and thus,
    income tax liability should generally be treated as a marital debt.

   Appeal from the District Court for Douglas County: Molly
B. Keane, Judge. Affirmed as modified.
   Ryan D. Caldwell, of Caldwell Law, L.L.C., for appellant.
 Philip B. Katz and John Andrew McWilliams, of Gross,
Welch, Marks & Clare, P.C., L.L.O., for appellee.
   Moore, Bishop, and Arterburn, Judges.
   Bishop, Judge.
                  I. INTRODUCTION
   The Douglas County District Court dissolved the marriage
of Leland Knapp (Jody) and Nataliya Knapp, awarded them
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             32 Nebraska Appellate Reports
                         KNAPP V. KNAPP
                      Cite as 32 Neb. App. 669

joint legal and physical custody of their children, and divided
their property and debts. On appeal, Jody challenges the district
court’s decision in (1) awarding Nataliya the marital home,
alimony, and the family cats; (2) not awarding him credit for
his premarital interests in the marital home and a retirement
account; (3) including all of his employment severance pay-
ments as part of the marital estate; and (4) failing to deter-
mine his 2021 tax liability was a marital debt. Finding merit
to Jody’s claim regarding his severance payments, we affirm
as modified.
                        II. BACKGROUND
                    1. Initial Pleadings and
                      Pretrial Proceedings
   Jody and Nataliya were married in Vermont in April 2003.
They had two sons, ages 18 and 15, at the time of trial. In
November 2021, Nataliya filed a complaint for dissolution
of marriage, and Jody filed a counterclaim. The parties both
filed motions requesting that the court enter a temporary order
related to various matters. After a hearing, the court entered a
temporary order: granting joint legal and physical custody of
the children; ordering the parties to rotate possession of their
two cats; ordering Jody to pay Nataliya $750 per month in
child support, plus $1,000 per month for the mortgage associ-
ated with the marital home; and awarding Nataliya exclusive
possession of the marital home and requiring her to pay the
mortgage on the home.
   In March 2022, Nataliya filed a motion requesting that
the temporary order be amended to alter the parenting time
schedule and eliminate the rotation of the possession of the
cats. Also in March, Jody filed a “Motion to Determine 2021
Tax Filing Status,” requesting that the district court order the
parties “to file married filing jointly for the 2021 tax year,
and requir[e] them to evenly divide any tax refunds or tax
liability.” Nataliya filed an objection to Jody’s motion, claim-
ing that she believed most of Jody’s tax liability “directly
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             32 Nebraska Appellate Reports
                          KNAPP V. KNAPP
                       Cite as 32 Neb. App. 669

originate[d] from [Jody’s] lack of appropriate tax withholdings
and early cashing in of retirement funds, of which [she] was
unaware.” Following a hearing, the court entered an order on
April 8, amending the temporary order to remove the require-
ment that possession of the cats be rotated and requiring that
they instead remain in the marital home. The court also denied
Jody’s motion asking that the parties be required to file jointly
for the 2021 tax year.
                      2. Trial and Decree
   Trial was held on August 19 and September 28, 2022. The
parties’ sons testified in camera in the presence of the par-
ties’ attorneys. Jody and Nataliya each testified, and over 100
exhibits were received into evidence. On January 11, 2023, the
district court entered a decree dissolving the parties’ marriage.
The court awarded the parties joint legal and physical custody
of their sons, with equal parenting time of the youngest son;
the oldest son was attending college. Jody was ordered to
pay Nataliya $726 per month in child support, and $1,000 per
month in alimony for a term of 72 months.
   The district court used the date of the parties’ separation,
March 1, 2022, as the valuation date for the marital estate and
divided the parties’ property and debts accordingly. We will
set forth in our analysis the evidence relevant to each error
assigned by Jody in his appeal, along with the district court’s
decision as to each issue.
                III. ASSIGNMENTS OF ERROR
   Jody assigns, reordered, that the district court abused its
discretion by (1) awarding alimony to Nataliya, (2) awarding
the marital home to Nataliya, (3) failing to set off a portion
of the downpayment on the marital home that came from a
premarital asset, (4) failing to set off a portion of a retirement
account that came from premarital funds, (5) including a por-
tion of Jody’s severance in the marital estate, (6) failing to
treat a tax liability as a marital debt, and (7) awarding Nataliya
possession of the family cats.
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             32 Nebraska Appellate Reports
                         KNAPP V. KNAPP
                      Cite as 32 Neb. App. 669

                 IV. STANDARD OF REVIEW
   [1,2] 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. Doerr
v. Doerr, 306 Neb. 350, 945 N.W.2d 137 (2020). This standard
of review applies to the trial court’s determinations regarding
custody, child support, division of property, alimony, and attor-
ney fees. Id. A judicial abuse of discretion exists if the rea-
sons 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. Id.
                          V. ANALYSIS
                           1. Alimony
                    (a) Evidence at Trial and
                    District Court’s Decision
   Jody’s employment changed numerous times during the
parties’ 19-year marriage for job advancement purposes; his
field of expertise was in “pharmaceutical operations, quality
systems,” and “business development.” Nataliya testified that
Jody’s job often required travel. At times, Jody had a commute
of 45 minutes to 1 hour 15 minutes or had to stay in a separate
state during the week. Jody testified that he “really only trav-
eled two stints of seven months each” and was home every
weekend during those periods. Jody’s employment changes,
at times, required that the parties move to another state. The
parties ultimately settled in Omaha, Nebraska, in 2010. Jody’s
employment continued to change, but the parties remained in
Omaha to provide stability for the children. Jody’s jobs con-
tinued to require travel and long commutes.
   Nataliya testified that she obtained her bachelor’s and mas-
ter’s degrees in education and music in Ukraine prior to meet-
ing Jody. When she and Jody married, she worked at a mall
until she had their oldest son, at which point she stayed home
to care for him. She also worked at a hospital as a “per diem”
interpreter for a “couple hours here and there.” In 2009, she
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             32 Nebraska Appellate Reports
                         KNAPP V. KNAPP
                      Cite as 32 Neb. App. 669

worked as hospital support staff while Jody was unemployed.
She left this job when they moved to another state for Jody’s
new employment.
   According to Nataliya, she had been with her current
employer and its predecessor for about 10 years. Her title at
the time of trial was “decision support analyst” and her annual
salary was “[a]round [$]85- to 87,000.” Nataliya chose to take
a remote position “[b]ecause it’s better for [her] family.” The
position allowed her to take her sons to school and “just be
. . . present for them.” Jody said that Nataliya was offered
other positions which would have increased her annual salary
to “[$]120- to 170,000.” However, he stated, Nataliya “chose
to stay home all those years.” Nataliya acknowledged that
she previously had the opportunity to seek a position with
higher pay, but she did not pursue the opportunity because it
required significant travel and she wanted to be present for the
children. She testified that she was primarily responsible for
taking care of the children’s day-to-day needs. When asked
whether she was “making the most [she] possibly [could],”
Nataliya responded, “At this time right now, yes.” Nataliya
requested alimony of $3,500 per month for 108 months.
   The district court ordered Jody to pay $1,000 per month in
alimony for a term of 72 months, commencing the first day of
the month following the entry of the decree.
                    (b) Argument on Appeal
   Jody claims the district court abused its discretion by award-
ing Nataliya alimony. He argues that given the facts of this
case, the award of alimony “punish[ed] Jody for sacrificing his
time with his children in order to attain a better life for them
and Nataliya,” and Nataliya was rewarded “for not pursuing
and taking advantage of opportunities that would have not
only benefitted her presently and long term, but the lives of
[their] children.” Brief for appellant at 40.
   [3-7] The law regarding alimony is well established.
         In dividing property and considering alimony upon
      a dissolution of marriage, a court should consider four
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        Nebraska Court of Appeals Advance Sheets
             32 Nebraska Appellate Reports
                          KNAPP V. KNAPP
                       Cite as 32 Neb. App. 669

      factors: (1) the circumstances of the parties, (2) the dura-
      tion of the marriage, (3) the history of contributions to
      the marriage, and (4) the ability of the supported party
      to engage in gainful employment without interfering
      with the interests of any minor children in the custody
      of each party. Dooling v. Dooling, 303 Neb. 494, 930
      N.W.2d 481 (2019). In addition, a court should consider
      the income and earning capacity of each party and the
      general equities of the situation. Id. Alimony is not a
      tool to equalize the parties’ income, but a disparity of
      income or potential income might partially justify an
      alimony award. The purpose of alimony is to provide for
      the continued maintenance or support of one party by the
      other when the relative economic circumstances make it
      appropriate. Id.
         In reviewing an alimony award, an appellate court
      does not determine whether it would have awarded
      the same amount of alimony as did the trial court, but
      whether the trial court’s award is untenable such as to
      deprive a party of a substantial right or a just result. Id.
      The ultimate criterion is one of reasonableness. Id. An
      appellate court is not inclined to disturb the trial court’s
      award of alimony unless it is patently unfair on the
      record. Id.
Seivert v. Alli, 309 Neb. 246, 266-67, 959 N.W.2d 777, 793
(2021). See, also, Neb. Rev. Stat. § 42-365 (Reissue 2016) (set-
ting forth factors to consider and purpose of alimony award).
   In awarding Nataliya alimony, the district court stated that it
had considered the factors in § 42-365, as well as “the income
and earning capacity of each party and the general equities of
this situation.” In doing so, it found:
      The parties have been married for 19 years. The testi-
      mony showed that [Jody] changed employment 13 to
      14 times over those 19 years. Some of [Jody’s] prior
      jobs included positions where he spent a significant por-
      tion of his time in Louisiana, traveled to Pennsylvania
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                         KNAPP V. KNAPP
                      Cite as 32 Neb. App. 669

      to work only returning on the weekends, and worked
      in Iowa.
         [Nataliya] worked during the marriage, but took a
      position that offered her the flexibility to work from
      home affording her the ability to maintain the parties’
      household. The testimony at trial reflects that [Nataliya]
      was almost exclusively responsible for handling the day-
      to-day needs, activities, doctor appointments, and the like
      of the minor children during the week. [Jody] alleges
      that [Nataliya] is underemployed, but the Court finds the
      testimony of [Nataliya] credible that she is not underem-
      ployed at this time. [Nataliya] explained that in 2014 she
      encountered an opportunity to start a new position mak-
      ing more money, but [Nataliya] testified that the position
      included a significant amount of travel, which she could
      not do given the needs of the minor children.
         Given all of these factors, the Court determines that
      the alimony award in this case is reasonable and serves
      the purpose of alimony as outlined in statute and caselaw.
   We can find no abuse of discretion in the district court’s
assessment supporting its award of alimony to Nataliya. Jody
argues that “Nataliya chose to be a homemaker, and later
stay-at-home mother to the parties’ two minor children until
they reached school age.” Brief for appellant at 37. He states
that “[m]eanwhile, [he] struggled for the family by climb-
ing the employment ladder in order to support and provide a
stable lifestyle for them.” Id. He further argues that “Nataliya
has the capacity to improve her already significant income if
she so chooses,” given that she turned down “opportunities
for greater pay of approximately $120-170,000 annually.” Id.
at 38.
   [8] Nataliya sacrificed much of her career to care for the
children. She did work at various points in time and reentered
the workforce about 10 years prior to the divorce. Jody’s
positions often required that he travel and take long com-
mutes. As such, when Nataliya returned to the workforce,
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             32 Nebraska Appellate Reports
                         KNAPP V. KNAPP
                      Cite as 32 Neb. App. 669

she chose a position that allowed her significant flexibility to
continue caring for the needs of the children. For this reason,
she had to hold off on pursuing an employment opportunity
that offered a higher salary but required significant travel.
Further, the district court found Nataliya’s testimony that she
was not underemployed at the time of trial to be credible.
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. Wright v. Wright, 29 Neb. App. 787,
961 N.W.2d 834 (2021). We therefore cannot find that the
district court abused its discretion in the alimony awarded
to Nataliya.
                        2. Marital Home
                    (a) Evidence at Trial and
                    District Court’s Decision
   The stipulated value of the marital home was $500,000.
The remaining debt on the home as of March 1, 2022, was
$245,136. The existing mortgage was a 15-year loan with
an interest rate of 2.375 percent and monthly payments of
$2,762.
   Nataliya requested that she be awarded the marital home.
She had two options for paying the remainder of the mort-
gage. The first option would be to assume the existing 15-year
loan with a 2.375 percent interest rate. This option was
contingent upon her qualifying to assume the mortgage and
would require that she continue to pay monthly payments of
$2,762. Her second option would be to refinance the loan.
With that option, she could choose a 30-year mortgage, likely
with a higher interest rate, but with smaller monthly pay-
ments. Nataliya testified that she had not been preapproved to
refinance her loan with her bank. But she claimed she could
afford to pay the mortgage because her income was $87,000
per year and she would have approximately $525,000 of the
marital estate, based on her proposed division.
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        Nebraska Court of Appeals Advance Sheets
             32 Nebraska Appellate Reports
                         KNAPP V. KNAPP
                      Cite as 32 Neb. App. 669

   Jody had filed pretrial motions requesting that the marital
home be sold; however, on the first day of trial, he withdrew
his motion and instead requested that he be awarded the
home. Jody expressed that he was better equipped financially
to maintain the home. He was preapproved to refinance the
house, and his finances would allow him to assume the loan
under its existing terms. According to Jody, “Nataliya ha[d]
never paid the mortgage until just since the temporary order”
and he “paid for all of [the] household expenses.”
   Jody intended to return to the marital home long term
and live there with the children. When asked why he previ-
ously requested a sale of the marital home, Jody stated that
Nataliya could not afford the house and that, at the time, he
believed market demand for housing was going to go down
because interest rates were rising. When asked whether he
was “going to play some dirty trick and . . . get the house and
turn around and sell it,” he responded, “No,” and stated that
he intended “to maintain that residence for . . . the long term
with [his] boys.”
   The court awarded the marital home to Nataliya, along
with the associated mortgage. The court required that Natalia
refinance or take any other action necessary to remove Jody’s
name from liability on the mortgage within 120 days of the
entry of the decree. If Nataliya could not comply with that
provision, she was required to sell the marital home and keep
the proceeds.

                    (b) Argument on Appeal
   Jody contends the district court abused its discretion in
awarding the marital home to Nataliya. He does not argue
that “the award of the marital home to Nataliya caused an
inequitable division of the marital value”; rather, he argues
that the award “was not reasonable under the facts and circum-
stances of the parties and thus caused an untenable decision
that unfairly deprived [him] of the home.” Brief for appellant
at 24. He claims that he was better able to “take care of the
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                          KNAPP V. KNAPP
                       Cite as 32 Neb. App. 669

financial obligation of the home,” id., and that his income is
significantly higher than Nataliya’s and her expenses exceeded
her monthly income.
   The district court properly exercised its discretion in award-
ing the house to Nataliya. Both parties indicated that they
wanted the marital home and that they would assume the exist-
ing mortgage or refinance it. While it is true that Nataliya’s
monthly income is less than Jody’s, her alimony payments and
other assets would assist her in maintaining the marital home.
Further, Nataliya had continued living in the home since
March 1, 2022, when the parties separated. Meanwhile, Jody
twice requested that the court order the sale of the house. It
was not until the first day of trial that he withdrew his second
motion for sale of the marital home and asked for the home
to be awarded to him. The court was within its discretion to
evaluate these circumstances and award Nataliya the house.
We cannot say that the district court abused its discretion in
awarding Nataliya the marital home.

                     3. Equitable Division of
                         Marital Estate
   Several of Jody’s assigned errors relate to how the district
court classified certain property to reach the marital equaliza-
tion judgment he owes to Nataliya. We first set forth the legal
principles guiding our review of these alleged errors.
   [9-10] In a dissolution of marriage proceeding, “‘[i]f the
parties fail to agree upon a property settlement . . . the
court shall order an equitable division of the marital estate.’”
Dooling v. Dooling, 303 Neb. 494, 507, 930 N.W.2d 481, 495
(2019). Under § 42-365, the equitable division of property is
a three-step process. See Dooling v. Dooling, supra. The first
step is to classify the parties’ property as marital or nonmarital,
setting aside the nonmarital property to the party who brought
that property to the marriage. 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
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                         KNAPP V. KNAPP
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the parties in accordance with the principles contained in
§ 42-365. Dooling v. Dooling, supra. As a general rule, a
spouse should be awarded one-third to one-half of the marital
estate, the polestar being fairness and reasonableness as deter-
mined by the facts of each case. Id.
   [11-16] Generally, all property accumulated and acquired
by either spouse during a marriage is part of the marital
estate. Dooling v. Dooling, supra. Exceptions include prop-
erty that a spouse acquired before the marriage, or by gift or
inheritance. Id. 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. Marshall v. Marshall, 298 Neb. 1, 902 N.W.2d 223
(2017). Setting aside nonmarital property is simple if the
spouse possesses the original asset, but can be problematic
if the original asset no longer exists. Id. Separate property
becomes marital property by commingling if it is inextricably
mixed with marital property or with the separate property of
the other spouse. Id. But if the separate property remains seg-
regated or is traceable into its product, commingling does not
occur. Id. The burden of proof rests with the party claiming
that property is nonmarital. Id.
   [17-19] A nonmarital interest in property may be established
by credible testimony. Burgardt v. Burgardt, 304 Neb. 356, 934
N.W.2d 488 (2019). “[A] spouse’s own testimony can estab-
lish a ‘“tracing link,”’ i.e., tracking an asset to a nonmarital
source.” Id. at 364, 934 N.W.2d at 495. See, also, Brozek v.
Brozek, 292 Neb. 681, 874 N.W.2d 17 (2016). Of course, tri-
ers of fact have the right to test the credibility of witnesses
by their self-interest and to weigh it against the evidence, or
the lack thereof. Burgardt v. Burgardt, supra. Evidence not
directly contradicted is not necessarily binding on the triers
of fact, and may be given no weight where it is inherently
improbable, unreasonable, self-contradictory, or inconsistent
with facts or circumstances in evidence. Id.
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                          KNAPP V. KNAPP
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   [20] While documentary evidence may be more persuasive,
it is not absolutely required. Burgardt v. Burgardt, supra.
However, “a party opting to rely upon his or her testimony
alone does so at the risk of nonpersuasion.” Id. at 365, 934
N.W.2d at 495.
               (a) Downpayment on Marital Home
                     (i) Evidence at Trial and
                     District Court’s Decision
   Prior to the parties’ marriage, Jody owned a home in Chazy,
New York. He sold the house within months of their marriage
and they “took the money from the sale of the Chazy [house],
put it in the bank, kept it.” He claims to have made $24,000
from that sale which they then “rolled . . . into [their] next house
in St. Louis.” They made $12,000 when they sold that house
and then purchased a house in Vermont and made an additional
$3,000 when they sold it. Each time they moved, they “rolled”
the equity from the house they sold into the next house they
purchased by using those funds as downpayments until they
purchased the marital home in Omaha. When they purchased
that home, they made a downpayment of $43,287.11, and of
that amount, Jody claimed that at least $24,000 came from the
sale of his premarital house in Chazy.
   Jody offered some documentation to support his testimony.
Exhibit 127 is a “Settlement Statement” reflecting the sale of
the Chazy property to Jody in December 2001, which predated
the marriage. The contract sales price for the property was
$74,500. Exhibit 128 is a “County Clerk’s Recording Page,”
recorded in September 2003 (the parties married in April
2003), showing a “TRANSFER TAX” of $374 received for
“CONSIDERATION” of $93,500, and an “Indenture” with the
same date, regarding Jody’s sale of the Chazy house. Exhibit
114 is a “Settlement Statement” reflecting the parties’ purchase
of the Omaha marital home in September 2010. The contract
sales price for the property was $283,000; a $43,287.11 cash
payment was applied to the purchase price plus other costs.
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  The district court concluded, without any explanation, that
Jody did not meet his burden of showing that $24,000 of the
downpayment on the marital home was premarital.

                     (ii) Argument on Appeal
   Jody argues that the district court abused its discretion when
it declined to set off a portion of the downpayment for the
marital home. He argues that “it is overwhelmingly evident
that the proceeds from the sale of Jody’s premarital real estate
in New York are traceable through the use as a down payment
on subsequent family homes up to, and including, the Omaha
marital home.” Brief for appellant at 27. He points out that
the court received documentary evidence showing he made
$24,746.40 in proceeds from the sale of the Chazy house. He
states that he established a tracing link by his own testimony
when he described the purchases and sales of homes through-
out the marriage. He testified that each time they purchased a
new home, they used the initial $24,000 and any new equity
from the sale of their last home to purchase their next home.
They continued to do this until they purchased the marital
home in Omaha.
   Jody is correct that a spouse can establish a “‘tracing link’”
through his own testimony, and while documentary evidence
may be more persuasive, it is not absolutely required. See
Brozek v. Brozek, 292 Neb. 681, 701, 874 N.W.2d 17, 32
(2016). However, as noted previously, a party opting to rely
upon his or her testimony alone does so at the risk of nonper-
suasion. See Burgardt v. Burgardt, 304 Neb. 356, 934 N.W.2d
488 (2019). In this case, the documentary evidence establishes
that Jody purchased the Chazy property in December 2001
for a contract price of $74,500. He married Nataliya in April
2003 and then sold his premarital property in September 2003.
A transfer tax document indicates consideration of $93,500
was paid for that sale. These documents could arguably sup-
port $19,000 in primarily premarital equity gained by Jody
as a result of this initial sale. However, there is no settlement
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statement for the September 2003 sale of the Chazy property
to confirm whether any equity was actually paid out to Jody.
Jody claimed he was entitled to $24,000 in premarital equity,
whereas the documentation, if found sufficiently persuasive,
only supported $19,000 in premarital equity from the sale of
the Chazy house. And that presumes the sale price was $19,000
greater than the total of any outstanding mortgages or other
liens associated with the property.
   [21] This is a situation where if the district court had
given Jody a premarital set off for $19,000, we likely would
not have found that to be an abuse of discretion. Similarly,
however, since the district court was not persuaded by the
evidence, we cannot say it abused its discretion. As we previ-
ously noted, triers of fact have the right to test the credibility
of witnesses by their self-interest and to weigh it against the
evidence, or the lack thereof. Burgardt v. Burgardt, supra.
Here, the district court evidently did not find Jody’s testimony
tracing a portion of the downpayment on the marital home
to be credible. An appellate court will consider the fact that
the trial court saw and heard the witnesses and observed their
demeanor while testifying, and will give great weight to the
trial court’s judgment as to credibility. Hamit v. Hamit, 271
Neb. 659, 715 N.W.2d 512 (2006). As such, we cannot say the
court abused its discretion when it did not set off a portion of
the value of the marital home as premarital property.
                 (b) Retirement Account #4129
                    (i) Evidence at Trial and
                    District Court’s Decision
   The parties had numerous retirement accounts with the
largest in value being an IRA account in Jody’s name end-
ing in #4129 (retirement account #4129). Exhibit 79, titled
“Defendant’s Statement of Assets & Debts,” was introduced
into evidence as an aid to the court. It listed Jody’s values of
the parties’ various retirement accounts as of March 1, 2022,
the separation date. Retirement account #4129 was valued
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at $420,888, but a note on the document reflects that the
“[p]remarital portion [was] $36,666.00,” leaving a marital
value of $384,222. Jody asked the court to subtract the pre-
marital portion “off the top of the value” and then allocate the
rest of it to him.
   Exhibits 81 through 91 were received into evidence to
reflect “money that [Jody] owned and had retirement accounts
[for] prior to the marriage.” The following colloquy then
took place between Jody’s attorney and Jody regarding the
funds in retirement account #4129, which Jody claimed were
premarital:
         Q. Okay. And then somehow, some way that money
      ultimately made it to [retirement account #4129]; is that
      right?
         A. That is correct.
         Q. Okay. But as we sit here today you don’t have any-
      thing showing me the direct funnel step by step, piece by
      piece going into [retirement account #4129]?
         A. No, I do not.
         Q. Okay. But, ultimately, it’s your position just to
      show the court you have got funds [that] existed prior
      to the marriage and, ultimately, $36,666 of that made it
      to [retirement account #4129]; is that right?
         A. That is correct.
   On cross-examination, Jody stated that he “kept these
[accounts] separate. And then eventually [he] rolled them
all into one.” He stated that he did so with each account “at
different times.” However, he conceded he did not have docu-
mentation to show the rollover of these funds into retirement
account #4129; “It was 20 years ago almost.” Statements
from multiple retirement accounts belonging to Jody from
2001 to 2003 were received into evidence; however, as indi-
cated in the course of cross-examination, none of these docu-
ments confirmed that these funds were rolled into retirement
account #4129.
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   The district court awarded retirement account #4129 to
Jody but did not find any of the funds in the account to be
premarital. Also, Jody was directed to transfer $100,000 from
that account to Nataliya “by an IRA Rollover” to “equalize the
allocation of the retirement funds” and the “division of mari-
tal property.”

                    (ii) Argument on Appeal
   Jody claims the district court abused its discretion when
it did not set aside $24,430.81 of retirement account #4129
as premarital property. He points out that the documentary
evidence established the balance of five of his accounts that
he had prior to the marriage. He states that the value of
those accounts amounted to a total of either $22,076.61 or
$24,430.81. He further contends that he traced the funds
from those accounts to retirement account #4129 through
his testimony.
   The documentary evidence Jody provided at trial contra-
dicted his testimony. Jody testified that the five premarital
accounts had a value of $36,666. However, in each exhibit
introduced to support this assertion, the balance of the accounts
was circled, and the total sum of those circled balances is
$24,430.81—not $36,666. Jody confirms this by his own cal-
culations on appeal.
   Jody contends that his testimony and documentary evi-
dence regarding the funds in retirement account #4129 were
uncontroverted. However, as previously explained, evidence
not directly contradicted is not necessarily binding on triers
of fact, and may be given no weight where it is inherently
improbable, unreasonable, self-contradictory, or inconsistent
with facts or circumstances in evidence. See Burgardt v.
Burgardt, 304 Neb. 356, 934 N.W.2d 488 (2019). Further, tri-
ers of fact have the right to test the credibility of witnesses
by their self-interest and to weigh it against the evidence,
or the lack thereof. Id. The district court did not find Jody’s
testimony tracing a portion of the funds in retirement account
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#4129 to be persuasive. Although the documentary evidence
establishes that Jody did in fact own some investments before
the marriage, the lack of any documentary evidence that these
accounts were rolled into retirement account #4129 leaves
open the possibility that they could have been cashed out or
rolled into other accounts. And while documentary evidence
is not required, it can be more persuasive, and “a party opting
to rely upon his or her testimony alone does so at the risk of
nonpersuasion.” Id. at 365, 934 N.W.2d at 495. Accordingly,
we cannot say the court abused its discretion when it did not
set aside a portion of the funds in retirement account #4129
as premarital.
                     (c) Severance Payment
                    (i) Evidence at Trial and
                    District Court’s Decision
   In July 2021, Jody began a new job running the “global sup-
ply chain” for a “beauty products” company. He worked there
until February 7, 2022. Exhibit 49 is a copy of Jody’s February
7 separation agreement with that company. Paragraph 5 of that
document provides for his “Separation Compensation.” It indi-
cates that upon Jody’s execution of the agreement, the com-
pany “will pay [Jody] a continuation of [Jody’s] base rate of
pay for a period of twelve (12) weeks according to [the compa-
ny’s] payroll practice paying the amount of [$6,730.77] every
two weeks with the total gross severance of [$40,384.62].”
Deductions were to be made from the payments, including
for federal and state tax withholding, FICA, and “all other
deductions required by law and/or authorized in writing by
[Jody].” The parties agreed that the net amount of $29,351.70
was paid out in six installments over 12 weeks. Exhibit 50
is an “Earnings Statement” for Jody from the company that
reflects that the third installment (net $4,891.95; gross year-
to-date “[s]everance” of $20,192.31) was paid on April 1 for a
“[p]eriod [b]eginning” on March 13 and a “[p]eriod [e]nding”
on March 26.
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   On March 21, 2022, Jody began new employment with
a pharmaceutical company, making $175,000 annually. He
stated that he did not receive any pay from his new employ-
ment until early April, so he was covering his expenses with
the severance payments during that period. He testified that
he spent almost $10,000 during that time to “set up [his]
apartment.” He acknowledged getting “double pay” for a
period when he was receiving both the severance payments
from his former employment and his paychecks from his new
employment. It was Jody’s estimation that of the $29,000
net severance pay he received, approximately half was paid
to him while he was also being paid by his new employer.
Because of that, his position was that only $15,000 should be
considered marital property (approximately the total severance
amount received when he was also receiving paychecks from
his new job).
   The district court treated all of Jody’s severance payments,
net valued at $29,351.70, as marital property awarded to
Jody. The only explanation provided was: “The Court treats
this as marital property as [Jody] terminated his employment
with [the beauty products company] on a date prior to the
separation of the parties and the income is a result of [mari-
tal] activity.”

                    (ii) Argument on Appeal
   Jody asserts that “[t]he district court abused its discretion
by including [his] severance payment as part of the mari-
tal estate.” Brief for appellant at 32. He contends that half
the severance was used while he was not employed during
February and March 2022 and that from those severance
payments, he paid household expenses in February and child
support and general expenses for the children in February
and March. He therefore argues that the first $14,675.85 net
pay received in those 2 months should be excluded from
the marital estate, while the remaining $14,675.85 that he
received once he started receiving paychecks from his new
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employment in April could be included in the marital estate.
We find some merit to Jody’s argument based on evidence
supporting that the purpose of the severance agreement was
merely to continue Jody’s wages for 12 weeks after his
employment was terminated, thus serving as a substitute for
lost future earnings.
   Both parties refer us to Malin v. Loynachan, 15 Neb.
App. 706, 736 N.W.2d 390 (2007), for this court’s discus-
sion of severance pay in that case. This court observed that
Nebraska had not yet addressed the issue of how to divide a
spouse’s severance package in a dissolution action. In review-
ing decisions from other states (Connecticut, Minnesota, and
Michigan), this court determined that the severance package
at issue in that case required looking at what portion of the
severance package the spouse earned during the marriage.
The trial court in that case determined that $71,000 of the
husband’s severance package constituted wages and set that
amount off separately to the husband; however, this court
concluded that part of that severance benefit consisted of
both marital and nonmarital property. See id. In essence, this
court impliedly determined that the purpose of the severance
package was to compensate for past work rather than lost
future wages.
   [22,23] Notably, in Grigsby v. Grigsby, 648 N.W.2d 716
(Minn. App. 2002), the Minnesota case referenced in Malin
v. Loynachan, supra, the Minnesota court looked for guid-
ance on intangible assets as discussed in a treatise. See 2
Grace Ganz Blumberg, Valuation and Distribution of Marital
Property § 23.08 (2006). Although the Grigsby court dis-
cussed a section in that treatise related to personal injury
awards, see 2 Blumberg, supra, § 23.08, we turn our atten-
tion to another section specific to severance pay. See id. at
§ 23.04. That section points out that “[i]n most cases, the
ostensible purpose of severance pay is to provide a salary
substitute for the worker while he or she searches for a new
job.” Id. at 23-88. “Severance pay presents the same dilemma
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posed by disability pay, workers’ compensation, and personal
injury recoveries earned during the marriage but received after
divorce.” Id. at 23-88 to 23-88.1. Although the right to ben-
efits was earned or acquired during the marriage and therefore
suggests a marital property classification, “the purpose of the
benefits, which is generally replacement of postdivorce earn-
ings, suggests a separate classification.” Id. at 23-88.1. Many
states have “looked to the purpose of the benefits in order
to determine their classification.” Id. at 23-88.3. If intended
as deferred compensation for marital labor, the benefits are
marital property; however, if “intended to replace postdivorce
earnings, they are classified as the worker’s separate prop-
erty.” Id. at 23-88.4.
   A recent case by the Alaska Supreme Court cites to Malin
v. Loynachan, supra, for the proposition that while severance
pay may be a substitute for lost future earnings, it may also
award an employee more money based on the length of prior
service and therefore “compensate at least partially for past
work.” See Hudson v. Hudson, 532 P.3d 272, 280 (Alaska
2023). The Alaska court initially pointed out that the clas-
sification of severance and bonus pay related to employment
during a marriage, but which was received after separation,
was an issue of first impression in Alaska. See id. It observed
that other states deciding this issue looked to the intended
purpose of the severance benefit and found that generally
when benefits were additional compensation for prior marital
services or a replacement for lost marital pension rights, then
the benefits were marital property. See id. However, when the
benefits were compensation for lost postmarital wages, then
they were separate property. See id. The Alaska court also
pointed out that when determining the purpose of severance
pay, courts have relied on the language of the agreement or
testimony from an employer. It concluded that “this purpose-
based analysis aligns with Alaska law, because it classifies
severance benefits based on whether they are ‘compensation
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for marital services’ or are intended to replace future, post-
divorce earnings.” Id. at 280.
   The Alaska Supreme Court vacated the trial court’s deter-
mination that the severance and bonus pay at issue in that
case was separate property based in part on when the benefits
were received. See Hudson v. Hudson, supra. It concluded the
trial court erred by not examining the purpose of the sever-
ance pay at issue in that case. However, the Alaska court also
noted that neither the severance agreement nor other related
materials were admitted at trial, and therefore, the court sug-
gested that additional testimony or other evidence might be
necessary on remand. See, also, In re Marriage of Bishop,
46 Wash. App. 198, 204, 729 P.2d 647, 650 (1986) (having
determined severance or termination pay was not form of
deferred compensation but was primarily intended to allevi-
ate economic fallout from unexpected dismissal, court con-
cluded that severance pay that “simply substitutes for a loss
of wages” is “separate or personal property of the dismissed
person . . . to which his former spouse has no claim”).
   [24] Guided by these principles, we conclude that when
classifying severance pay as marital or nonmarital, a court
should determine the purpose of the severance pay. When
severance benefits constitute additional compensation for past
work during the marriage or a replacement for lost mari-
tal pension rights, then the benefits are marital property.
However, when severance benefits are compensation for lost
postmarital wages, then they are separate, nonmarital prop-
erty. In this case, the separation agreement and a copy of the
April 1, 2022, paystub reflecting the third severance payment
were received into evidence. When the documentary evidence
is considered with Jody’s testimony, it is evident that the sev-
erance pay at issue in this case was not to compensate Jody
for his past work efforts, particularly since Jody only com-
menced working for the company in July 2021. The separation
agreement states that its purpose is to “specify the separa-
tion compensation” and refers to “a continuation” of Jody’s
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base rate of pay for a period of 12 weeks. Additionally, the
“Earnings Statement” shows that the gross severance pay of
$6,730.77 on April 1 was for a 2-week period beginning on
March 13 and ending on March 26 (the parties separated on
March 1), with all required payroll deductions being withheld.
Therefore, the severance payments at issue can only be con-
strued to replace lost future wages for a 12-week period due to
an unexpected dismissal and not to compensate for past work
or some sort of deferred compensation based on past perform­
ance. Further, since most of the lost future wages appear to
be for periods of time after the parties separated on March 1,
Jody’s request to set off only $14,351.70 as nonmarital and to
allocate $15,000 of the net severance as marital should have
been granted. We therefore conclude that it was an abuse of
discretion for the district court not to do so.
                  (iii) Modification of Marital
                      Equalization Judgment
   The district court attributed the entire $29,351.70 net sever-
ance pay to Jody as a marital asset. Reducing the marital value
of the severance pay to $15,000 results in $14,351.70 less value
attributable to Jody’s share of the marital estate. Therefore,
the marital equalization judgment of $23,062 set forth in the
decree shall be reduced by $7,175.85 ($14,351.70 ÷ 2) for a
modified marital equalization judgment of $15,886.15 owed by
Jody to Nataliya.
                         (d) Tax Liability
                    (i) Evidence at Trial and
                    District Court’s Decision
   The parties filed their 2021 tax returns separately as directed
by the district court in an order entered in April 2022. Nataliya
testified that during the pendency of the divorce, she discov-
ered that Jody made withdrawals from a retirement account
without her knowledge. Jody acknowledged that he made two
separate withdrawals of $25,000 from a retirement account
to invest in cryptocurrency in March 2021. He also made a
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withdrawal of $16,500 in May 2021 to pay an outstanding
income tax liability. Jody claimed that Nataliya was aware of
the withdrawals. According to Nataliya, she knew Jody with-
drew money to pay their tax liability for 2020, but that she did
not know about the two additional $25,000 withdrawals. The
withdrawals resulted in increased tax liability for Jody for the
year 2021.
   The district court did not address the 2021 tax liability in
the decree.
                      (ii) Argument on Appeal
   Jody contends the district court abused its discretion when it
“failed to take into consideration a large tax liability that Jody
solely was responsible for due to the parties filing separate tax
returns in 2021.” Brief for appellant at 42. Nataliya’s liability
was $3,598, while Jody’s was $15,698.
   We initially observe that the decree is silent as to the 2021
tax liability for either party. Paragraph 31 of the decree is
labeled “PRIOR YEARS TAX RETURNS & REFUNDS.” It
then states that “neither party shall file amended federal or
state tax returns without receiving the written consent of the
other party, which consent shall not be unreasonably withheld.”
Further, since the district court did not include a summarized
list of all assets and liabilities with values as allocated between
the parties in its decree, we cannot confirm whether the court
did in fact exclude this liability or any portion of it when
calculating the marital equalization judgment. Regardless, to
the extent the court did not credit Jody or Nataliya with their
respective 2021 tax liabilities when calculating the marital
equalization, we find no abuse of discretion.
   Jody argues that the tax liability was “clearly marital as it
was a result of a tax on Jody’s 2021 income for which he was
liable as of January 1, 2022[,] before the parties separated on
March 1, 2022.” Brief for appellant at 43. Jody claims that his
tax liability should be included as a marital debt when deter-
mining the marital estate or, alternatively, that both parties’
2021 tax liability be included as marital debt.
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   [25] It is true that income tax liability incurred during the
marriage is one of the accepted costs of producing marital
income. See Meints v. Meints, 258 Neb. 1017, 608 N.W.2d 564
(2000). Income tax liability should generally be treated as a
marital debt. Id. However, “equity may not demand the same
result if credible evidence establishes that the delinquent tax-
paying spouse spent significant funds on nonmarital pursuits.”
Id. at 1024, 608 N.W.2d at 569.
   Here, there is no allegation that Jody was delinquent in pay-
ing taxes; however, there was evidence that Nataliya was not
aware that Jody withdrew $50,000 from a retirement account
to purchase cryptocurrency, thus resulting in an unexpected
increased tax liability for 2021. Prior to trial, the district court
denied Jody’s motion asking the court to order the parties to
file their taxes jointly for the 2021 tax year, and as previously
noted, the decree was silent as to this request.
   Even assuming the district court abused its discretion by not
factoring in both parties’ 2021 tax liabilities when calculating
the marital equalization judgment, the small benefit received
by Nataliya as a result of not having this debt perfectly
equalized does not result in the receipt by Jody of less than
one-third of the marital estate. See Thiltges v. Thiltges, 247
Neb. 371, 527 N.W.2d 853 (1995) (division of property is not
subject to precise mathematical formula, but general rule is
to award spouse one-third to one-half of marital estate). As a
result, we find no reversible error stemming from this alleged
omission.
                            4. Cats
                   (a) Evidence at Trial and
                   District Court’s Decision
   The parties had two cats. Nataliya testified that the cats
were not “family animals,” but the “boys’ animals.” She stated
that one of the children had asked for a cat for his “birthday
and Christmas wishes for years” and that they were finally
“convinced to a have a cat.” They then purchased one of the
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cats for him. Jody testified that the cats “weren’t [the chil-
dren’s]. They were a part of [their] family.” Jody said that
he “drove 16 hours . . . to Missouri to pick up” one of the
cats. The “cats were part of the family” and he missed them
tremendously. Jody believed Nataliya “want[ed] the cats for
herself only and d[idn’t] want to share them whatsoever.” He
believed she wanted “to manipulate them so they’re with her
all the time.”
   If awarded ownership of the cats, Jody would allow them
to visit Nataliya’s home. Jody said this arrangement had pre-
viously worked for them and that although the cats took “the
first day or so . . . to adjust,” they eventually “transitioned
extremely well.” According to Nataliya, it was stressful for the
cats to travel in a pet carrier every week. The children offered
their observations related to the cats in their testimony, but
because their comments do not affect our decision, we will not
recount it here.
   The district court awarded Nataliya the cats “for the benefit
of the minor children” and provided that “[u]pon the children
reaching the age of majority, the children shall receive owner-
ship of the cats.”

                     (b) Argument on Appeal
   Jody contends that the district court abused its discretion
“by awarding possession of the family cats to Nataliya.” Brief
for appellant at 40. Jody notes that the parties did not assign
a monetary value to the cats, because possession of the cats
does not provide a “financial advantage to either party for
purposes of division of the marital estate.” Id. at 41. He argues
that “in situations where there isn’t a financial consequence,
the review and determination based on equity, fairness, and
reasonableness, are ever more important.” Id. He argues that
“[e]quity, fairness, and reasonableness would dictate that each
party receive one cat.” Id. at 42.
   Jody argues that the evidence at trial did not support
Nataliya’s claim that the cats belonged to the children.
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However, there was conflicting evidence regarding to whom
the cats belonged. Jody claimed they belonged to the family
as a whole. Nataliya testified that the cats were not “family
animals,” but the “boys’ animals.” When evidence is in con-
flict, 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. Wright
v. Wright, 29 Neb. App. 787, 961 N.W.2d 834 (2021). As
such, we cannot say that the district court abused its discretion
regarding the cats.
                       VI. CONCLUSION
   For the reasons set forth above, we affirm the decision of the
district court, as modified.
                                       Affirmed as modified.