MARITAL PROPERTY

The following information was excerpted from the State Bar of Wisconsin’s Consumer’s Guide to Wisconsin Law, a publication containing basic information about Wisconsin law and citizens’ legal rights and responsibilities. The Consumer’s Guide is available by sending $3.50 plus tax to: State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53707-7158. You can also call and order at (608) 257-3838 or 1-800-362-8096.

The information is intended to describe Wisconsin’s marital property law in plain language. Because the law is very complex and there may be exceptions to the general terms below, the information should not be relied upon for any statement or conclusion of law.

Why a Marital Property Reform Act?
The Wisconsin Uniform Marital Property Act was enacted because it reflects the belief that what a couple acquires during their marriage belongs to them equally. It is the intent of this law to recognize that each spouse makes equally important contributions to the success of the marriage. These contributions are recognized by equal ownership of the assets acquired.

What is Marital Property?
To understand what marital property is, it is necessary to know how property between married couples has been held in the past.

Up to Jan. 1, 1986, the effective date of the Wisconsin marital property law, title to the property determined ownership, management and control. Title could be shown by a Deed to Real Estate, certificate of title to a car, stock certificate or other documents that established ownership. As of Jan. 1, 1986, marital property includes all income and assets of the married couple except gifts and inherited property. Each spouse owns marital income and assets equally. The name on the title document is not proof of ownership but it is still important in determining who may manage and control that item of property. The right to management and control has a parallel duty of fairness to the other spouse when managing that property.

What is the Effective Date for the Marital Property Law?
If you are already married and are residents of Wisconsin, the law took effect on Jan. 1, 1986. For those not married or not residing in Wisconsin as of Jan. 1, 1986, the law becomes effective on the marriage date or the date that you become residents of this state.

Is there any Property that a Spouse can Own Individually?
Yes. To explain what property a spouse may own individually requires an explanation of how property is classified under the law.

Marital Property–This is property owned equally by both spouses. For example, it will include the income from a paycheck, interest and dividends on investments, real estate and personal property purchased during the marriage. It can be property that is acquired through the work of one or both spouses.

Individual Property–This is property owned by one spouse alone. It is property either owned prior to Jan. 1, 1986, or marriage, or received during marriage as a gift or inheritance. Individual Property does not include interest earned or accrued from individual property. This is Marital Property.

Mixed Property–Mixing marital property and individual property results in all the property being presumed marital property. Couples wishing to preserve individual property will have to keep detailed records so that the part of mixed property that is individual property can be traced. These are some examples of mixed property: a bank account begun with individual funds that becomes mixed as interest accumulates; an inherited apartment building that becomes mixed as rents are used to pay off the mortgage; an unincorporated business owned prior to marriage may become mixed if a spouse continues to operate and expand it. Survivorship Marital Property–This is marital property that goes directly to the surviving spouse without probate. It is similar to property owned as joint tenants.
Deferred Marital Property–This is property acquired by a spouse during marriage, but before the effective date of the law for the couple, which would have been marital property if acquired after the effective date. On the death of the acquiring spouse the survivor may elect to receive up to onehalf of the deferred marital property. The other onehalf is distributed under the deceased spouse’s will.

Can Individual Property be Mixed with Marital Property Unintentionally?
Yes. The increase in the value of individual property can become marital property under certain circumstances. The rule is that substantial appreciation of individual property due to the substantial uncompensated efforts of either spouse results in the increase in value becoming marital property. For example, if one spouse builds an extra room on a cabin individually owned by the other, the appreciation of value of the cabin due to the addition becomes marital property. Marital property and individual property are now mixed. Appreciation of individual property due to the effects of inflation or changes in market value remains individual property.

What Effect Does the Law Have on Life Insurance or Pension Plans?
Life insurance and pension plans have special rules because often payments are made to them both before and during marriage. Formulas are spelled out to calculate the marital property and individual property portions.

A nonemployee spouse has a marital property interest in the pension plan only up to his or her death. Thus, if the nonemployee spouse is the first to die, he or she cannot will away one-half of the pension plan of the surviving employee spouse. The classification of death benefits from an insurance policy depends upon when the insurance was issued and the classification of the premium payments. Therefore, in some instances, a surviving spouse will have an interest in the death benefit even if not a named beneficiary. This may be critical in second marriages where each spouse wishes to name children of the first marriage as beneficiaries. A special agreement will have to be made between the spouses in these situations.

Can a Couple Decide they do not want to be Under the Law?
Yes. Spouses can enter into a marital agreement to opt out of the new law partially or completely. The agreement must be in writing and signed by both spouses. An attorney can assist in drafting a marital agreement.

The marital agreement must be fair when it is made and it must be voluntary or it may not be enforceable. There must be a fair and reasonable disclosure of assets and liabilities at the time it is made. If one attorney represents both husband and wife, it would be wise to state in the agreement that both spouses do not wish to have their own attorney.

Will the Homemaker Spouse have an Easier Time Obtaining Credit?
Yes. This is one of the purposes of the law. When extending credit, a creditor must consider all marital property, including the other spouse’s income in determining whether the spouse applying for credit qualifies.

The marital asset most used to qualify for credit is future income. When a marriage ends by death or divorce, any income earned after that is no longer marital property. Therefore, creditors are likely to want to protect their interests by asking both spouses to sign for the credit. That would enable them to go after the future income of either spouse when the marriage ends. Otherwise the creditor could only go after the income of the spouse who signed for the credit.

What Rights do Creditors have Against Marital Property in Enforcing Debts?
Debts incurred during marriage are presumed to be in the interest of the marriage or family. The creditor can collect those debts by going after all marital property of a couple or the individual property or the spouse who created the debt. The need to pay for each other’s debt can be limited by a marital property agreement. The creditor must be informed of the terms of the marital agreement before the debt is created. This may be advisable for spouses who are separated or cannot agree on money matters.

What can be Done Under the Law if there is a Dispute Between Spouses About their Property?
The law provides a number of remedies that can be sought in court. They include an accounting of the couple’s financial situation, having a spouse’s name added to a title document, restricting management and control rights of the other spouse and classifying property to determine what is marital, individual or mixed property. There are also remedies to allow access to marital property, to get property back or a reimbursement from a third person if the spouse tries to transfer more of the marital property to that person than the law allows.

How much Marital Property can be Given Away by a Spouse as a Gift?
One spouse acting alone may give up to $1,000 of marital property per person per year. Unless they are quite wealthy, both spouses must act together to give away larger amounts. Couples who are involved in making gifts to children in amounts equal to the state and federal maximum annual exemptions for estate tax purposes should remember that if the gift is made from marital property, both will probably have to consent.

What Effect Does the Law have on Divorce?
The law is not intended to have effect on divorce. When the “no fault” divorce law was enacted, the principle of “equitable division” became applicable to property settlements. Under this principle all property other than that received by gift or inheritance is divided 50/50. Some latitude for adjustments is allowed in special cases such as a hardship to one spouse or minor children.

What Effect does the Law have on My Will?
The effect of a will may be altered by the law. The dying spouse’s estate will be that spouse’s individual property plus one-half of all marital property regardless of who has title. The will could pass a one-half interest in certain property that is titled in the name of the surviving spouse to someone other than that spouse and thereby create a type of co-ownership. Wills written before 1986 should be reviewed in light of the Marital Property Law.

What Effect will the Law have on Distribution of Property if I do not have a Will?
All of the deceased spouse’s estate goes to the surviving spouse unless there are children from a prior marriage. If there are children from a prior marriage, all the decedent’s children share equally in half of the property, and the surviving spouse gets the other half.

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This information which is based on Wisconsin law is issued to inform and not to advise. No person should ever apply or interpret the law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.