Property Division in Divorce in Wisconsin
Wisconsin is considered a community property state. This means all marital property and assets will be divided 50/50 in the event of a divorce, legal separation, or annulment. Property gifted to an individual spouse or property inherited by each person may be excluded from the 50/50 division.
Dividing Property in a Wisconsin Divorce
One of the biggest roots of conflict and stress in a divorce is property division because financial stability allows us to maintain our basic needs. From looking to protect assets you’ve been building for years to understanding the rights of a person who's been financially abused to just looking to learn what you can expect moving forwards, we want to help.
For cases in WI, marital property is divided equally between the divorcing parties. For both assets and debts there is a 50/50 division in the event of a divorce, legal separation, or annulment. However, separate property that was given as a gift to an individual spouse or property inherited by one person is often excluded from the 50/50 division.
In the event of a divorce, property division can happen in a two different ways:
- An agreement between the two parties
- A decision by the court
If an agreement is reached between the parties, the court is likely to sign off on it as long as it is fair and equitable. If the parties have to go to court, the court will divide property as best fits the situation.
Although Wisconsin courts favor the equal distribution of marital assets, the following are some factors taken into consideration that may cause the court to distribute property differently:
- The length of the marriage
- The property each spouse brought into the marriage
- Age of and physical and emotional health of the spouses
- Each spouse's contributions to the marriage
- Substantial assets not subject to division by the court (e.g., substantial separate property, such as a large inheritance)
- Each spouse's earning capacity (the ability to earn income based on education, skills, job history, and local employment opportunities)
Understanding Property During Divorce
Property refers to anything that has any positive or negative monetary value that can be bought or sold. Wisconsin Marital Property Law classifies all property owned by married couples as marital property; however, there is some variation. The following are examples of property:
- Cash and bank accounts
- Pension plans and 401(k)s
- Life insurance with cash value
Community and Quasi Community Property
Community property is another phrase commonly used in place of marital property. It refers to all property that was acquired during the course of the marriage. Similarly, Quasi Community property is property that was purchased by one or both spouses while living in a state that did not have community property laws. Once that couple moves to a state with community property laws, like Wisconsin, the court treats it as community property–as if it was acquired in a community property state.
The only property that is exempt from equal property division is property acquired by gift or an inheritance from a third party. On occasion, the court will divide a gift/inheritance to avoid financial hardship of one side, but that is uncommon.
This comes into question when inherited or gifted funds have been commingled into a marital asset. For example, inheritance funds deposited into a joint account or used to purchase a marital home would now be commingled. A separate asset that becomes a marital asset is often a point of contention.
When going through a divorce, it is common for an individual to want a gift or inheritance back. The law states that to prove a separate property was commingled, there must be “donative intent” on the part of the spouse who received the inheritance. This means that there must be evidence that the spouse wanted to give the inheritance to the marriage or the other spouse.
Gifts exchanged between the two parties during their marriage are generally divided equally.
If one spouse exclusively owns property from outside the marriage, as long as it hasn't been maintained using marital funds, it is separate property. Mixed property, then, occurs when a separate property is mixed with community property.
Any mixed property will be considered marital property unless the added piece of marital property can be traced. For example, if one spouse started contributing to the other spouse's retirement account before they got married and continued to after the marriage, then the retirement account would be considered mixed property. To split this account, the court determines what portion is martial and what portion is separate.
Negotiating for the Best Distribution of Assets During the Divorce
It may be worthwhile to negotiate the distribution of assets with your spouse before the issue has to be decided by the court. Going through and thoughtfully organizing all of your assets can prevent an undesired distribution by the courts. Wisconsin courts will strive to split the assets 50/50, but it is best for most couples to create a marriage settlement that fits their particular situation before handing it over to the judge for approval.
Transferring Titles Once Property Is Divided
Once property is divided and the divorce is finalized, ex-spouses must transfer the appropriate property into the correct party’s name. This can be done through a quitclaim deed, where one person will be “quitting” their interest in a property. At this time the loan would be refinanced to be only in the name of the person keeping the property.
Who Gets to Stay in the House?
One party cannot kick the other party out of the house until the court tells them they can. When deciding who gets to keep the house, judges will want to know whose funds were used to purchase the house, whether the purchase occurred before or during the marriage, and what the house was used for during the marriage. If one party is keeping the house, they will have to buy out the other party. Another option is to sell the house and split the profits.
What Determines Who Gets the House in a Divorce?
The marital home, like other assets accrued during a divorce, is subject to division. The Marital Property Act recognizes that both spouses contribute the marriage, regardless of the income actually brought-in by each spouse.
The law states that all assets acquired during the marriage belong to each spouse equally. There are many factors that determine which party may retain the marital residence, including custody and placement of the children, financial stability of each party, and other factors.
Who Decides How to Divide Our Assets and Debt?
Property and debt division can be a very stressful negotiation. It requires a detailed understanding of all assets that are jointly and independently held, as well as a specific knowledge of all debt that has been accrued before and during the marriage. There are various factors to consider, as was listed in the first section above. Who decides how this is all split depends on the relationship you and your spouse have during the divorce process and how well you both can negotiate on these matters. There are three main options:
1.) You and Your Spouse Can Agree On Your Own.
If you and your spouse are relatively civil and able to negotiate on decisions, you and your spouse can decide on the division of assets and debts yourselves. You would then present your conclusions detailed in the divorce settlement agreement to the judge for approval.
2.) You and Your Spouse Can Agree in Mediation.
In situations where spouses are willing to negotiate the assets and debts themselves but want/need assistance to ensure the negotiation is productive, spouses can utilize mediation to resolve any conflicts. Mediation may also be ordered by the judge depending on your specific situation. The conclusions of the negotiation must still be detailed in the divorce settlement agreement and approved by a judge.
3.) If You Can't Agree, the Judge Will Decide.
If parties can’t work it out between themselves or with a mediator, the decision goes to the court where the case plays out and a court commissioner or a judge makes the final decision. This is when having the support of an attorney becomes even more important because now each side will have to make their argument and attempt to convince the judge to rule with their proposal. At Sterling Law Offices we specialize in divorce cases, so we work with these division negotiations every day.
Does It Matter Whose Name Is on the Deed of the Marital Home?
It does not matter whose name is on the house’s deed because the marital home is a marital asset. Even if one person contributes more financially to the home, the courts value all forms of contribution. If the home was bought before the marriage, then there are more factors that will need to be assessed.
Is It Important to Include the “Legal Description” of Our House or Land in the Final Decree of Divorce?
It depends on which county the divorce is going through. Some counties require an addendum to the marriage settlement agreement (MSA) that includes the description of any houses or land in the final decree of divorce.
Can One Spouse Be Reimbursed for Improvements to the Other Spouse's Separate Property?
If a property is owned separately by party number one, and they used communal funds to pay for the improvements–then yes, party number two is entitled to reimbursement of those funds. This use of communal funds can sometimes make the property a marital asset. Similarly, if party number one uses their own funds to improve their own property, then party number two may be entitled to collect on the increased value of the property.
How Does Divorce Affect Debt?
Marital debts are community property, so like marital assets they are split 50/50 unless there are unique circumstances such as if a party has debt linked to their separately owned property. This means that even if one person was racking up credit card debt and the other party had no idea, it’s still a marital debt. That being said, a spouse can contest that a debt was incurred not in the interest of the family.
Creditors Are Not Bound by Your Debt Division
This is true. If debt was split up in a divorce and the other party doesn’t pay their loan or defaults on it, the creditors can come after their ex-spouse for it. To avoid this, a lot of people try to pay off as much marital debt with marital assets before or during the divorce.
Debt Usually Stays with the Property
Debt does stay with the property, but that does not mean the person keeping that property will be paying all the debt. For example, say it’s decided that one party will keep a car that has a car loan on it. The person keeping the car will also have to take over the car loan and refinance that loan to put it in just their name, but a chunk of that loan may be paid off as part of the divorce. Either way, the positive value of the car and the negative value of the loan will be considered in the 50/50 split.
My Spouse Is Keeping the Car. Can I Get My Name Off the Debt?
Usually, the best and only way to avoid being on the hook for your ex-spouse’s debt is for the person keeping the car debt to refinance the auto loan in their name alone.
With this, including the vehicle identification number in the final divorce decree can be useful to protect against future post-divorce property disputes–but it isn’t really that important, so it’s not always included.
Can Retirement Benefits Be Divided?
In a divorce, retirement accounts are considered marital property and will be split 50/50 like all other forms of marital property, but calculating their exact value is tricky. Similar to the home, even if only one party had an income and put some of it away for retirement, the court will split it equally because they value all forms of labor within a relationship.
Can We Each Keep Our Own Retirement?
As listed in the three options for splitting up property, the first two options in dividing property is to see if both parties can agree on an equitable distribution. If both parties agree to keep their own retirement accounts, then that’s how it will be. When one spouse’s retirement is much larger than the other’s though, there may need to be a trade of some sort. The key here is for the division to be equitable, so if the retirement account is worth $15k and the car is also worth $15k, then the spouse with the retirement account could give up their claim to the car.
Frequently Asked Questions
How long do you have to be married to get half of everything in Wisconsin?
A marriage of any duration will split up marital assets 50/50. In a short-term marriage, less than 5 years, one can make the argument that assets from before the marriage are not marital assets and should not be split up. Every case is dependent on many factors and length of the marriage is one of them.
Who stays in the marital home through the divorce process?
The marital home is a joint asset and neither party has more claim to it than the other.
What does equitable distribution mean in a divorce case?
The term equitable distribution is misleading because equitable does not mean 50/50. In an equitable distribution state, if a couple cannot agree on how to split up property, the court of that state assesses the situation using their laws then splits up the property in a way they deem fair to both parties. This doesn't mean splitting it down the middle.
Is Wisconsin an equitable distribution state?
Wisconsin is not an equitable distribution state, it is a community property state where all marital property is divided equally.
Is it better to pay off debt before a divorce?
It is often beneficial to pay off marital debts before or during the divorce process. If debt is split, and after the divorce one party doesn’t pay theirs, the creditors can still come after the other party. This is why using marital assets to pay off marital debts before the divorce process or as a part of the divorce process can be beneficial–it ties up financial loose ends.
Can a prenuptial agreement protect my assets?
Prenuptial agreements are usually created with the intent to protect one’s assets because an agreement of this type outlines how to divide property in the event of a divorce. These agreements are not indestructible and can sometimes become ineffective.
My spouse's behavior caused our divorce–does that impact their property share?
In WI, no-fault divorce means the reasons for the divorce have little to no consequence in the actual divorce. For example, adultery generally has no effect on a divorce. To file for a divorce one party simply has to believe that they are incompatible or there are irreconcilable differences. One instance where behavior could affect property distribution is in the event of marital waste where one party proves the other party used marital assets in a way that added no value to the marriage.
References: Video by youtube.com/c/sterlinglawyers | 1. What is Quasi Community Property?. LegalMatch. (2019, November 27). | 2. WI Statute, 767.61 § (2)(b). Property Division. | 3. Wright v. Wright, 469 A.2d 808 (1983) | 4. Marital Property: Answering Your Legal Questions. State Bar of Wisconsin. (2012, August). | 5. Marital Property Law in Wisconsin. State Bar of Wisconsin. (2010).
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