Divorce is tricky enough when trying to equally distribute family assets. When spouses are also business partners, the situation becomes especially difficult because the business’s assets need to be divvied up as well.
This is particularly true among ranch and farm families. When one spouse begins the marriage with land or livestock, who gets the property when the marriage ends?
Nebraska is community property state. This means that marital property is split equally between the spouses while property that was brought into the marriage stays with that spouse.
But what happens when that line is blurred? Among farm and ranch families, that line is blurred often.
In re Marriage of Mallorie
Although this case is from Oregon, it offers a good example about both how difficult divorce cases can be and their likely resolution.
Prior to their marriage, the husband owned 362 dairy cows. The couple married and formed a dairy business which leased each cow from the husband for $8 per cow per month.
After the productive life of each cow – about three years – it was sold and replaced by a new cow entering its peak productive life. The cows were purchased for about $900 each and sold for about $500 each.
After 20 years, the couple ended their marriage with a herd of 493 dairy cows. The trial court ruled that the husband brought 362 cows into the marriage and 131 were acquired during the marriage.
The trial court reasoned that the situation was the same as if the husband had come into the marriage with 362 shares of Microsoft stock, sold it during the marriage and used the proceeds with no additional marital assets to buy Amazon stock. The court ruled the 362 head should remain with him.
Appeals court ruling
The wife appealed, arguing that the 362 original cows had been replaced and all cows were now owned by the joint dairy business.
The appellate court agreed with the wife. The court wrote that the ruling in favor of the husband would be correct if the cows had been exchanged at face value.
However, the lease allowed either the husband or the dairy to terminate the agreement at any time. The 362 cows were therefore not “perpetual cows” and were more like perishable produce that needed to be replenished.
Also, the court wrote that the dairy paid several hundred dollars over the sale price to replace each cow. This amounted to a sizeable comingling of funds, therefore the business stock analogy is not accurate.
Even the easiest of divorces is difficult. If you are going through a divorce and have questions about what constitutes marital property, contact an experienced, qualified attorney to get the best counsel available.