Marital Property: How do you know?

08.01.2024

Author: Attorney Adam J. Sorrentino

Wisconsin is one of only nine states that is a “community property” or marital property state. Property owned by spouses is either considered marital property or individual property. In marital property states, the law presumes that all property owned by spouses is owned jointly. Essentially, each spouse owns 50% of all marital property.

In Wisconsin, there are some exceptions to this rule. The most common exceptions occur when: (1) property was owned individually prior to marriage; (2) property is gifted to one spouse, and not both; and (3) property or value is gained through income or appreciation in value from individual property. Another carve-out exists when the parties reach an agreement on how property should be classified.

However, these exceptions are not as simple as they seem. Individual property that falls under the exceptions can still become marital property through “property mixing” or “active appreciation.”

While “mixed property” is not legally defined, it is used to analyze whether property should be considered individual or marital. Generally, if individual and marital property mix, then the property becomes marital property. However, if the individual part of that property is “traceable” that can still be considered individual property or an individual interest.

“Active appreciation” or “Industry Mixing” occurs when one or both spouses’ labor, effort, or skill results in a substantial appreciation in value to an individual or unclassified asset. Imagine remodeling a home or restoring a classic car. In those cases, the increase in value can become a marital property interest for the spouse who put in the effort.

After all that, there is still another way that property can be designated as marital or individual property. Partners and Spouses can decide what they want as marital or individual property through “Marital Property Agreements.” Partners can assign property to specific categories through valid prenuptial or postnuptial agreements. There are several specific requirements for these agreements to be enforceable in court. Always be sure to discuss any marital property agreements with an attorney to ensure that it is valid, enforceable, and correctly categorizes your property.

These examples are only a few ways in which property can be classified as marital or individual property in Wisconsin. While the default to marital property appears straightforward, many divorces require in-depth analysis to determine what a spouse’s interest really is.

If you are filing, or have filed, for divorce and are concerned about what could be classified as marital property, contact an attorney at your earliest convenience to determine what steps to take next.