766.31 Classification of property of spouses.

(1) General. All property of spouses is marital property except that which is classified otherwise by this chapter and that which is described in sub. (8).

(2) Presumption. All property of spouses is presumed to be marital property.

(3) Spouse's interest in marital property. Each spouse has a present undivided one-half interest in each item of marital property, subject to all of the following:

(a) Terminable interest in deferred employment benefit plan. As provided in s. 766.62 (5), the marital property interest of the nonemployee spouse in a deferred employment benefit plan or in assets in an individual retirement account that are traceable to the rollover of a deferred employment benefit plan terminates at the death of the nonemployee spouse if he or she predeceases the employee spouse.

(b) Division based on aggregate value at death.

1. Spouses may provide in a marital property agreement that at the death of a spouse some or all of their marital property will be divided based on aggregate value rather than divided item by item. However, at the death of a spouse, a marital property agreement is not necessary for a division of marital property that is not item by item.

2. The surviving spouse and the successor in interest to the decedent's share of marital property may enter into an agreement providing that some or all of the marital property in which each has an interest will be divided based on aggregate value rather than divided item by item.

3. The surviving spouse and a distributee who is a successor in interest to all or part of the decedent's one-half interest in marital property may petition the court to approve an exchange of interests in the marital property authorized under subd. 1. or 2., but court approval of the exchange is not required for the agreement under subd. 1. or 2. to be effective. If the court approves the exchange, the surviving spouse and the distributee shall exchange their respective interests in 2 or more items of marital property and distribute the items in a manner to conform with the exchange. The exchange shall:

a. Occur before the final distribution of the assets under the governing instrument;

b. Be composed of items which are fairly representative of the appreciation and depreciation that has occurred since the date of death;

c. Be composed of items having a fair market value at the time of exchange equal to what would have been distributed had no exchange request been made, including any money used in the exchange; and

d. Be reported with a written description of each item, its basis and its fair market value at the time of exchange in the manner prescribed by the department of revenue.

(4) Classification of income. Except as provided under subs. (7) (a), (7p) and (10), income earned or accrued by a spouse or attributable to property of a spouse during marriage and after the determination date is marital property.

(5) Transfer to a trust. The transfer of property to a trust does not by itself change the classification of the property.

(6) Property owned at determination date.

(a) Date of marriage same as determination date. If the date of marriage is the same as the determination date, the property owned at the determination date is individual property of the owning spouse.

(b) Date of marriage prior to determination date. If the date of marriage precedes the determination date, the property owned at the determination date is not classified by this chapter but is subject to all of the following:

1. Subsections (8) and (9) govern property owned at the time of marriage.

2. Subsections (8) and (9) govern property acquired while the spouses were married but before the determination date if the property would have been individual property had it been acquired after the determination date.

3. Subsections (8) and (9) and s. 861.02 govern property acquired while the spouses were married but before the determination date if the property would have been marital property had it been acquired after the determination date.

(7) Individual property after determination date. Property acquired by a spouse during marriage and after the determination date is individual property if acquired by any of the following means:

(a) By gift during lifetime or by a disposition at death by a 3rd person to that spouse and not to both spouses. A distribution of principal or income from a trust created by a 3rd person to one spouse is the individual property of that spouse unless the trust provides otherwise.

(b) In exchange for or with the proceeds of other individual property of the spouse.

(c) From appreciation of the spouse's individual property except to the extent that the appreciation is classified as marital property under s. 766.63.

(d) By a decree, marital property agreement or reclassification under sub. (10) designating it as the individual property of the spouse.

(e) As a recovery for damage to property under s. 766.70, except as specifically provided otherwise in a decree or marital property agreement.

(f) As a recovery for personal injury except for the amount of that recovery attributable to expenses paid or otherwise satisfied from marital property and except for the amount attributable to loss of income during marriage.

(7m) Personal injury damages; lost earnings. To the extent that marital property includes damages for loss of future income arising from a personal injury claim of a surviving spouse, the surviving spouse is entitled to receive as individual property that portion of the award that represents an income substitute after the death of the other spouse.

(7p) Unilateral statement. Income attributable to all or specified property other than marital property, with respect to which a spouse has executed under s. 766.59 a statement unilaterally designating that income as his or her individual property, is individual property.

(8) Rights in property acquired before determination date. Except as provided otherwise in this chapter, the enactment of this chapter does not alter the classification and ownership rights of property acquired before the determination date or the classification and ownership rights of property acquired after the determination date in exchange for or with the proceeds of property acquired before the determination date.

(9) Treatment of property acquired before the determination date. Except as provided otherwise in this chapter and except to the extent that it would affect the spouse's ownership rights in the property existing before the determination date, during marriage the interest of a spouse in property owned immediately before the determination date is treated as if it were individual property.

(10) Reclassification. Spouses may reclassify their property by gift, conveyance, as defined in s. 706.01 (4), signed by both spouses, marital property agreement, written consent under s. 766.61 (3) (e) or unilateral statement under s. 766.59 and, if the property is a security, as defined in s. 705.21 (11), by an instrument, signed by both spouses, which conveys an interest in the security. If a spouse gives property to the other spouse and intends at the time the gift is made that the property be the individual property of the donee spouse, the income from the property is the individual property of the donee spouse unless a contrary intent of the donor spouse regarding the classification of income is established.

History: 1983 a. 186; 1985 a. 37; 1987 a. 393; 1991 a. 301; 1993 a. 160; 2005 a. 216 ss. 39 to 52, 169, 173.

NOTE: 1991 Wis. Act 301, contains legislative council notes.

Marital property presumptions and tracing principals are applied. In Matter of Estate of Lloyd, 170 Wis. 2d 240, 487 N.W.2d 644 (Ct. App. 1992).

The marital property law does not reduce a non-negligent mother's wrongful death recovery for the father's contributory negligence in their child's death. Smith v. State Farm Fire & Casualty Co. 192 Wis. 2d 322, 531 N.W.2d 376 (Ct. App. 1995).

A quitclaim deed of a married couple's homestead from one spouse to the other is not valid to alienate the grantor's interest in the property in any way that would eliminate either spouse's contractual obligations under a mortgage containing a valid dragnet clause. Schmidt v. Waukesha State Bank, 204 Wis. 2d 426, 555 N.W.2d 655 (Ct. App. 1996), 95-1850.

The termination under sub. (3) of a marital property interest in pension benefits did not prevent the application of the equitable principle that a murderer should not profit from the crime. The trial court acted properly in imposing a constructive trust on the decedent's marital property interest in the murderer's pension benefits. Estate of Hackl v. Hackl, 231 Wis. 2d 43, 604 N.W.2d 579 (Ct. App. 1999), 99-0499.

Irreconcilable differences: Income from separate property under divorce law and under Wisconsin's marital property act. Bascom. 70 MLR 41 (1986).

The effects of the Wisconsin marital property act on trusts: Whose property is it? Kusky, WBB March, 1985.