Wisconsin has a marital property law which is based on a view of marriage as an equal partnership. It does not matter if one spouse’s efforts are more significant in the creation or acquisition of assets than the other spouse, the marital property law presumes that the acquired wealth during a marriage to be equal.
This law probably has it greatest significance at the time of termination of the marriage due to death or divorce. Upon divorce, the assets will be presumed to be divided on a 50/50 basis even if significant assets were owned prior to the marriage.
Individual property owned prior to marriage becomes marital when it is commingled with marital property, most often this marital property is the income generated by the party during the marriage. For example, if someone owns a home with a mortgage prior to marriage and then continues to pay on this mortgage with marital income, the classification of the home becomes marital. Upon divorce, the value of the home will be considered an asset which should be divided on an equal basis. Although the Court can deviate from the 50/50 if such seems to be equitable, the court’s decision would be a subjective decision.
The one way to avoid this problem is for the parties to take advantage of the marital property law which allows parties to define their partnership differently from a 50/50, equal partnership. A marital property agreement entered into prior to marriage, often referred to as prenuptial agreement, can define your partnership rights and obligations different from the marital property law.
For example, you can protect in the divorce process individual property acquired before the marriage even if additional contribution or appreciation to the asset occurs during the marriage.
In order to have an enforceable agreement at the time of the divorce there are certain legal requirements which need to be met. First, both parties need to make a full disclosure of their financial situation. Second, both parties need to consult with an attorney to appreciate how the prenuptial agreement differs from the rights and obligations accrued under the marital property law. Third, the agreement needs to be fair given the facts and circumstances of the parties’ situation.
Depending upon the amount of assets each partner has and the desire to co-mingle financial resources, premarital agreements can be crafted to be quite simple or complex. You can define your partnership however you want by identifying assets not available as partnership assets…or you can structure your partnership like a roommate situation where you each contribute so much toward the household bills and you never do anything joint. It’s up to you how you want to define and structure the partnership.
Another reason to use a prenuptial law or marital property agreement is because it is a second marriage and you want to preserve some assets for the benefit of your children and not complicate it by virtue of the marital property law as it relates to the second spouse. So that’s a good tool to identify what are individual assets, which are then distributed according to an estate plan developed by you.
The Premarital Agreement provides a number of safeguards for individuals entering into a marriage. As strong as a premarital agreement can be, the value of the agreement is predicated by both party participants consulting with independent family law attorneys that can provide guidance and insight regarding the content and structure of the agreement.
Jastroch & LaBarge Family Law attorneys are ready to serve your best interests by providing guidance and execution of Premarital Agreements to members of our community entering into the greatest partnership in life, marriage.