Property Division

Maybe you entered a marital property agreement (prenup) prior to your marriage, and now that you are contemplating divorce, you assume there is no point in discussing division of property because the prenup’s provisions will control. Or maybe you are considering signing a prenup as an iron-clad guarantee that if you ever divorce, property will be divided as you wish.

In either case, think again. Yes, in Wisconsin, prenup provisions concerning division of property are presumed to be valid and enforceable pursuant to the divorce statutes. Still, there are many possible grounds for challenging a prenup and having it thrown out.

Challenges to the property division provisions of a prenup are analyzed under Button v. Button, 131 Wis.2d 84 (1986), and cases applying Button. In summary, Button provides that a prenup may be vulnerable to challenge if the parties did not make full financial disclosure to each other before signing the prenup and entering the marriage. It may be vulnerable to challenge if one spouse did not have a meaningful choice whether to enter the agreement, considering factors such as adequate time to evaluate the agreement, advice of independent counsel, and comprehension of the agreement. It may be vulnerable to challenge if it was unfair to one of the parties based upon their circumstances at the time it was signed, or if it is unfair to one of the parties at the time of divorce due to unforeseeable changed circumstances. Under Button, a prenup will be thrown out if a court finds that it fails on any one of these points.

A common mis-perception about Wisconsin divorce law is the belief that the property, cash, and debts you owned before your marriage remain your separate property when you divorce, or are automatically awarded to you in the divorce. In fact, the property division section of the Wisconsin divorce laws, Wisconsin Statutes Section 767.61, states that all property acquired by either spouse before or during the marriage goes into the pot to be divided between the parties, either by the judge or by the parties’ agreement, at their divorce.

The statute does provide for two exceptions to this rule. (1) Any gifts of property or money you received either before or during your marriage remain your separate property, not subject to division in the divorce. This gift exception does not apply, however, to gifts you received from your spouse, which are included as property to be divided at divorce. (2) Any funds or property you received “by reason of the death of another” person remains your separate property, not subject to division in the divorce. This exception includes life insurance proceeds, inheritances, retirement benefits, etc. Under a “hardship” provision of the Wisconsin divorce laws, if the court finds that allowing you to keep your gifts and inheritances will create a hardship for your spouse or your children, the court will include your gifts and inheritances as property subject to division.

While these provisions are relatively straightforward, complications can arise. What if you inherited property, but then converted it to stocks held in your name alone? What if you received a gift of cash, and then used it as a down-payment on a home jointly titled with your spouse? What if your spouse inherited a cottage, and then you contributed materials and labor to fix it up? What constitutes a “hardship?” These sorts of issues have few clear-cut answers and often lead to litigation.

Articles Posted in Property Division

ENFORCEMENT OF PRENUPTIAL AGREEMENTS IN WISCONSIN: PROVISIONS REGARDING DIVISION OF PROPERTY UPON DIVORCE

Wisconsin Property Division: What About Property Brought to the Marriage?