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Dividing marital property is an essential, yet often complicated, process in divorce proceedings. In Wisconsin, the law sets rules about what counts as marital property, what is considered nonmarital property, and how those assets are divided when it comes time for divorce.
What is a Marital Asset?
When starting a divorce, the general starting point is that everything the parties own is marital property. Under Wisconsin Statute 767.31 subd. 1 and 2, all property of spouses is presumed to be marital property, unless it can be proven that the asset qualifies as nonmarital property. Marital property includes nearly all assets/debts that either spouse acquired during the marriage.
Under Wisconsin Statute 767.61, the Court will divide the parties' marital property unless the property is determined to be a nonmarital asset (see below).
Examples Include:
- The marital home or other real estate purchased during the marriage,
- Vehicles purchased during the marriage, and
- Bank accounts, retirement accounts, and investment portfolios that were started or contributed to during the marriage.
Marital property also includes income earned or accrued by a spouse during marriage.
What is a nonmartial asset?
Certain assets are not subject to division in a divorce proceeding because they are considered nonmarital property. This goes against the presumption that all assets owed by the parties are marital assets. Wisconsin Statute 767.61(2)(a) outlines assets that are the remaining assets of the individual and are not considered marital. These include:
- A gift from a person other than the spouse,
- Inheritance, including retirement accounts and accounts payable upon death, and
- Assets acquired by a nonmarital gift or inheritance.
The party claiming a nonmarital asset must establish how and why such an asset would not be counted towards the overall divorce settlement. These assets typically include property that one spouse owned before the marriage, or property that they inherited or were gifted during the marriage. Other examples include:
- Settlement for a personal injury claim (unless that amount is for loss of income or attributed to expenses paid from marital property),
- Property excluded from the marital estate via a valid prenuptial or postnuptial agreement.
Can assets be both marital and nonmarital?
The distinction between marital and nonmarital property can become blurred.
Marital Property "acquired" during the marriage can also include reducing indebtedness on encumbered property. For example, if a party owned a home with a mortgage before the marriage (a nonmarital asset) and paid on that mortgage during the marriage (using income, which is a marital asset), that home will have both a nonmarital and marital component.
Another example is individual property that becomes marital property through commingling. This can occur when nonmarital assets, such as cash, are commingled with marital assets to the point that the source of the asset can no longer be identified. For example, suppose a spouse inherits money from family members and deposits it into a joint checking account with their partner. In that case, that nonmarital asset may become comingled to the point where it is difficult or impossible to trace what remains of the inheritance.
How are marital assets divided?
Under Wisconsin Statute 767.61(3), there is a presumption of equal division of marital assets. Generally, the starting point for dividing the marital estate is to ensure that both parties receive the exact value of the assets after division.
For example, if a married couple has a marital estate totaling $500,000, each spouse would be awarded $250,000. How the assets are divided and which spouse gets what asset will depend on the parties' marital estate.
The parties can trade assets; for example, assuming a marital estate of $500,000, Spouse A keeps a house with equity of $250,000, and Spouse B keeps the retirement and investment accounts, as well as other assets totaling $250,000.
The parties can split assets: for example, assuming marital estate of $500,000, Spouse A keeps a house with $300,000 in equity, Spouse B keeps retirement/investment accounts and other assets totaling $200,000, Spouse A needs to provide an equalizer of $50,000 to Spouse B so that each party receives an equal split of $250,000 in assets.
The Court can deviate from an equal division after considering several factors, including, but not limited to:
- Length of marriage,
- Contribution of each party to the marriage, giving appropriate economic value to each party's contribution in homemaking and childcare services,
- The age and physical and emotional health of the parties,
- Earning capacity of each party, and
- Other economic circumstances of each party.
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