Difference between marital, pre-marital, gifted and inherited assets, and why it matters
Getting engaged is an exciting time when couples make plans for the future. For some, these plans may include making decisions about property and funds before tying the knot. Knowing the difference between marital, pre-marital, gifted, and inherited assets and why it matters, can help couples understand their property interests and plan for tomorrow.
Community Property v. Everything Else
Simply put, all property and debt acquired during a Wisconsin marriage is community property. This means that each partner shares a 50% interest in anything the couple acquires or owes while married. However, there can be other types of property which matter.
- Separate Property- This is property either party owned before getting married. In Wisconsin, the court looks at the determination date which is the date of marriage, the day when both spouses became residents of Wisconsin, or January 1, 1986, whichever is later, to determine what is separate property. Anything either person owned before the determination date belongs solely to them. A gift or inheritance given to one spouse may also belong exclusively to them. However, Wisconsin law provides that gifted and inherited property is subject to division in cases of hardship.
- Converting Separate to Community Property- There are ways in which separate property can become that of the community. For instance, if a spouse has a savings account and takes the funds out and adds them to the couple's joint checking account balance, they are considered to be co-mingled and therefore belonging equally to both people. Likewise, if one spouse adds the other to a property deed for a separate asset, it can become community property.
- Income from Separate Property-There can also be complicated issues surrounding income-generating separate property. For instance, you may own a business which your marital funds help support, and that creates income. Although the business was yours before marriage, if community assets and labor are used to help it function and thrive, there may be an argument that your spouse has some equitable interests in its value. This kind of situation is complex and would be best analyzed with the assistance of a divorce attorney.
- Community Assets in One Spouse’s Name- One common misconception is that opening an account or titling property in one person's name during marriage makes the asset separate property. Ordinarily, if you used community funds to establish or purchase the asset, it belongs to both spouses.
We have extensive experience in assisting our clients with understanding their pre-marital, marital, gifted, and inherited assets. Call us today to set up a consultation so we can take a “first look” and talk about your next steps.