Wisconsin is unique when it comes to determining who owns what in a marriage. Most states are common law states, which means that during marriage, ownership is determined by who acquired the property and whose name is on the title. A minority of states are governed by a different set of property law, and they are known as community property states. Wisconsin adopted such a system of laws on January 1st, 1986, but here, it is known as “marital property,” even though the essential features of our marital property laws are the similar to those of the other community property states.
In Wisconsin, generally all income earned by a spouse at work and through investment belongs to both spouses equally. This is true regardless of who earned it and whose name is on the title to the property. In addition, there is a presumption that all property in a marriage is marital property. If a spouse claims that a certain piece of property is not, then he or she has the burden of showing that. Otherwise, the property will be treated as if it was marital property.
In some cases, it is relatively easy to show that property is not marital property. For example, if one spouse brought some stock to the marriage and never sold it, the stock certificate will likely be individual property, owned solely by the spouse who acquired it.
In other circumstances, it may be very hard to trace the source of the property at issue. For example, if there is a bank account with a lot of deposits and withdrawals from both spouses, and the bank account was in sole possession of one spouse before the marriage, all of the money in that account will likely be treated as if it is marital property, even if there was a substantial amount of money in the account before the marriage. Once you co-mingle individual property with marital property, the general rule is that it all becomes marital property.
Of course, the classification of property as marital or individual does not matter much if one spouse leaves everything to the other when he or she dies. However, during a divorce or through a will that has more than the spouse as a beneficiary, things can get much more complicated. Gifts or inheritances received both before and after marriage are not considered marital property nor are they subject to division during a divorce. However, individual property brought to a marriage, and therefore not classified as marital property, is subject to some division during a divorce. Things get even more complicated when a couple living in a common law state like Minnesota or Illinois move to a community or marital property state like Wisconsin (or vice versa).
Wisconsin’s marital property laws can be confusing and counter-intuitive, so it is important that married couples in Wisconsin discuss or create their estate plans with an attorney. Estate planning is more than just creating a will. Call us now for a free consultation at 1-888-367-8198.