Background
Larry and Lynne Jeffers married in 2007 in neither party’s first marriage. Larry brought into the marriage approximately 75 percent ownership of Jeffers Farms, Inc., a family farming corporation. Starting in 2004, Cody Jeffers (Larry’s son) took over farm operations, and Larry became minimally involved in business and financial decisions. Lynne stopped working in 2009 and helped with childcare for Cody’s children, cooking, and delivering parts.
During the marriage, the corporation’s real estate value increased substantially—from approximately $2.4 million in 2010 to $8 million in 2024. In 2018, Jeffers Farms redeemed Christopher Jeffers’ stock, increasing Larry’s ownership percentage to 86 percent. The corporation provided the couple with housing and paid their living expenses throughout the marriage.
Larry filed for dissolution in January 2023, and trial occurred in October 2024 when both parties were over 70 years old. The trial court found that any appreciation in the farm’s real estate and the increase in Larry’s ownership share resulted from passive appreciation, not active marital efforts. It awarded Lynne alimony of $1,000 monthly for 24 months, then $500 monthly for an additional 24 months, terminating upon death, remarriage, or expiration of the 48-month term.
The Court’s Holding
The Court of Appeals affirmed the trial court on all three of Lynne’s assignments of error. First, regarding alimony, the court rejected her claim for lump-sum (alimony in gross) alimony. Although both parties were in their seventies with health issues, both had alternative income sources including Social Security, retirement benefits, and investment accounts. The court found the 48-month decreasing alimony schedule reasonable given that Lynne’s part-time employment was driven largely by attorney fees, which should not be ongoing expenses. The court held that while serious health problems may sometimes support non-terminating alimony, the trial court did not abuse its discretion here.
Second, the court held the appreciation in Jeffers Farms was passive and therefore nonmarital. Critical to this finding was that after 2004, Larry was not involved in the corporation’s business or financial decisions. Cody made those decisions. Although the corporation made updates to its homes and routine maintenance occurred, no significant real estate improvements were shown. The real estate value increase was attributable to market comparables, not active efforts. Lynne’s contributions—childcare, cooking, parts delivery—were not deemed active efforts to increase corporate value. The court emphasized that the party seeking to share in appreciation must prove it occurred, and the party claiming it is nonmarital must prove it is passive.
Third, regarding the increase in Larry’s ownership share from 75 to 86 percent following Christopher’s 2018 stock redemption, the court held this resulted from passive appreciation, not active effort. Because Larry was not involved in business decisions when the redemption occurred and had relinquished management to Cody, the ownership increase was not attributable to his active efforts. The court rejected the argument that knowledge of a decision or use of corporate funds to fund it constituted active appreciation.
Key Takeaways
- In valuing closely held family corporations, balance sheet values alone are insufficient; parties must prove appreciation beyond mere net equity changes and attribute it to marital versus nonmarital sources.
- Passive appreciation—whether from market forces, real estate comparables, or decisions made by third parties—remains nonmarital even if corporate funds finance it or one spouse has knowledge of the decision.
- Active appreciation requires involvement in first-tier management or control over asset value; once a spouse is no longer making business decisions, appreciation attributable to management decisions made by others cannot be converted to marital property.
- Alimony determinations receive broad deference; courts need not award lump-sum alimony even when parties are elderly with health issues and face economic disparity, if alternative income sources and transitional needs support a time-limited award.
- Burdens of proof differ by assertion: the party seeking to share in appreciation must prove it exists; the party claiming it is nonmarital must prove the appreciation is passive.
Why It Matters
This decision provides guidance for family law practitioners handling dissolutions involving family businesses and real property appreciation. It establishes that the timing and nature of a spouse’s involvement in business management is critical; a spouse who previously managed a company but stepped aside before value-generating decisions were made cannot claim marital property rights in that appreciation. The court’s treatment of burden-shifting—distinguishing between proving appreciation exists versus proving it is nonmarital—clarifies procedural requirements for parties litigating business valuations in dissolution cases.
The ruling also reinforces that Nebraska courts will not award lump-sum alimony based solely on health concerns or income disparity when alternative income sources and transitional alimony serve the purpose of allowing the recipient spouse to become self-supporting. Trial courts retain substantial discretion in structuring alimony awards, and appellate courts will not disturb such awards absent clear abuse.