Is an Inheritance Marital Property in Wisconsin?

In Wisconsin inheritances and gifts given to one spouse are not considered marital property by law. Rather inherited assets and gifts given to one spouse are called separate property, belonging to one person. This means an inheritance or gift is not subject to marital property division in a Wisconsin divorce.

Inheritance and Marital Property in Wisconsin

In general inheritances and gift are not considered marital property during a divorce, which means during the time of divorce they will not be subject to property division laws. Inheritance and gifts are not considered marital property[1] because these types of assets are considered separate property, which means they are solely owned by one person.

We say, in general, because there are exceptions to when inheritances and gifts are considered separate property. These types of assets can be classified as marital property if they are co-mingled with other marital assets or marital assets were used to improve the asset in any meaningful way. When these conditions are met inheritances and or gifts will be subject to marital property division during a divorce case.

Marital Property Scenario 1

If John and Mary are married and while married Mary graduates from college. Mary's parents are happy for their daughter and as a reward for graduating college they give Mary $30,000. Mary takes the $30,000 and puts it into a money market account in 1994. It is now 2014 and the marriage is not working.

Since Mary put this into a separate money market account and never added to the $30,000 with marital assets, which is the key in this scenario, the $30,000 is likely to be considered separated.

Marital Property Scenario 2

John and Mary are married in 1992 and Mary graduates from college in 1994. Mary's parents are excited about Mary graduating from college and give her $30,000. Mary takes the money and uses it as a down payment for their first house. It is now 2014 and the marriage is not working. Mary and John now have built up equity in the home and nearly own the home outright.

Mary wants to keep the home because she put $30,000 down for the house.

Since Mary used the $30,000 towards a marital asset this $30,000 is considered marital property and will likely be divided equally even though it was given only to Mary. The key here is Mary used the $30,000 towards a marital asset and both Mary and John paid for the remainder of the home using marital funds. This mean Mary co-mingled the $30,000, meaning it is now very likely going to be considered marital property subject to equal property division during their divorce case.

In the case Plachta v. Plachta 118 Wis.2d 329, 348 N.W.2d 193 (Ct. App. 1984),[2] the court of appeals decided the trial court was correct in refusing to divide certain non-marital property. However, the court of appeals also said if a trial court finds that a refusal to divide non-marital property creates a hardship on the other spouse or the children, it may in its discretion divest the done spouse of such property in a fair and equitable manner.

Is Inherited Property Divisible Due to Hardship?

In cases where it can be proven that a hardship is inevitable, yes, inherited property may be considered divisible.

This is seen in the case of Hughes v. Hughes 148 Wis. 2d 167, 434 N.W.2d 813 (Ct. App. 1988).[3] In this situation, the husband owned inherited property, and his health was also in decline. His wife worked, but due to her emphysema, her doctor advised her to quit working. The court had decided on a 50/50 property division split, and counted the inherited property as distributable. The husband appealed, and the court of appeals affirmed.

Is Property Purchased With Inherited Funds Divisible Marital Property?

It is actually very specific to individual cases.

The value of the property excluding the buying price would be an overage amount that may be considered divisible. Such as in the case of Torgerson v. Torgerson 128 Wis. 2d 465, 383 N.W.2d 506 (Ct. App. 1986).[4] In this case, however, both the wife and the husband signed the mortgage. On appeal from the original decision, the court decided that the value portion of the property – in excess of the down payment – is in fact a marital asset.

Do Gifts and Property Combine When They Are Together?

The court in Schwegler v. Schwegler, 142 Wis. 2d 362, 417 N.W.2d 420 (Ct. App. 1987)[5] decided that when a piece of land is gifted to a person and property is build onto that land, the two can be separated at the time of divorce. However, the separation is not certain. The court will look into the rest of the facts surrounding the case.


References: [1]Commonly Asked Marital Property Questions, [2]Plachta v. Plachta (1984), [3]Hughes v. Hughes (1988), [4]Torgerson v. Torgerson (1986), [5]Schwegler v. Schwegler (1987)


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