815.18 Property exempt from execution.

(1) Statutory construction. This section shall be construed to secure its full benefit to debtors and to advance the humane purpose of preserving to debtors and their dependents the means of obtaining a livelihood, the enjoyment of property necessary to sustain life and the opportunity to avoid becoming public charges.

(2) Definitions. In this section:

(a) “Aggregate value" means the sum total of the debtor's equity in the property claimed exempt.

(am) “Annuity" means a series of payments payable during the life of the annuitant or during a specific period.

(b) “Business" means any lawful activity, including a farm operation, conducted primarily for the purchase, sale, lease or rental of property, for the manufacturing, processing or marketing of property, or for the sale of services.

(bc) “Closely held business" means a corporation whose stocks are held by not more than 25 individuals, a partnership of not more than 25 partners who are individuals, or a limited liability company of not more than 25 members who are individuals.

(c) “Debtor" means an individual. “Debtor" does not include an association, a corporation, a partnership, a cooperative, an unincorporated cooperative association, or a political body.

(d) “Dependent" means any individual, including a spouse, who requires and is actually receiving substantial support and maintenance from the debtor.

(e) “Depository account" means a certificate of deposit, demand, negotiated order of withdrawal, savings, share, time or like account maintained with a bank, credit union, insurance company, savings bank, savings and loan association, securities broker or dealer or like organization. “Depository account" does not include a safe deposit box or property deposited in a safe deposit box.

(f) “Equipment" means goods used or bought for use primarily in a business, including farming and a profession.

(g) “Equity" means the fair market value of the debtor's interest in property, less the valid liens on that property.

(h) “Exempt" means free from any lien obtained by judicial proceedings and is not liable to seizure or sale on execution or on any provisional or final process issued from any court, or any proceedings in aid of court process.

(i) “Farm products" has the meaning given under s. 409.102 (1) (ig).

(j) “Inventory" has the meaning given under s. 409.102 (1) (Ls).

(k) “Life insurance" means a policy issued by a stock or mutual life insurance company or by any mutual beneficiary or fraternal corporation, society, order or association to insure the life of an individual.

(m) “Motor vehicle" means a self-propelled vehicle. “Motor vehicle" does not include equipment.

(n) “Net income" means gross receipts paid or payable for personal services or derived from rents, dividends or interest less federal and state tax deductions required by law to be withheld.

(r) “Resident" means an individual who intends to maintain his or her principal dwelling in this state.

(t) “To the extent reasonably necessary for the support of the debtor and the debtor's dependents" means what the court determines is required to meet the present and anticipated needs of the debtor and the debtor's dependents, after consideration of the debtor's responsibilities, and the debtor's present and anticipated income and property, including exempt property.

(3) Exempt property. The debtor's interest in or right to receive the following property is exempt, except as specifically provided in this section and ss. 70.20 (2), 71.91 (5m) and (6), 74.55 (2) and 102.28 (5):

(a) Provisions for burial. Cemetery lots, aboveground burial facilities, burial monuments, tombstones, coffins, cremation urns, urn vaults, outer burial containers, or other articles for the burial of the dead owned by the debtor and intended for the burial of the debtor or the debtor's family.

(b) Business and farm property.

1. Equipment, inventory, farm products, and professional books used in the business of the debtor or the business of a dependent of the debtor, not to exceed $15,000 in aggregate value.

2. If the debtor does not claim an exemption under subd. 1., any interest of the debtor, not to exceed $15,000 in aggregate value, in a closely held business that employs the debtor or in whose business the debtor is actively involved.

(c) Child support, family support or maintenance payments. Alimony, child support, family support, maintenance or separate maintenance payments to the extent reasonably necessary for the support of the debtor and the debtor's dependents.

(d) Consumer goods. Household goods and furnishings, wearing apparel, keepsakes, jewelry and other articles of personal adornment, appliances, books, musical instruments, firearms, sporting goods, animals, or other tangible personal property held primarily for the personal, family or household use of the debtor or a dependent of the debtor, not to exceed $12,000 in aggregate value.

(df) County fairs and agricultural societies. All sums paid as state aid under s. 93.23 (1) to county fairs and agricultural societies.

(ds) Federal disability insurance benefits. All moneys received or receivable by a person as federal disability insurance benefits under 42 USC 401 to 433.

(e) Fire and casualty insurance. For a period of 2 years after the date of receipt, insurance proceeds on exempt property payable to and received by the debtor, if the exempt property has been destroyed or damaged by fire or casualty of any nature.

(ef) Fire and police pension fund. All money paid or ordered to be paid to any member of any fire or police department or to the surviving spouse or guardian of the minor child or children of a deceased or retired member of any such department, which money has been paid or ordered to be paid to any such person as a pension on account of the service of any person in any such department in any city in this state whose population exceeds 100,000.

(em) Fire engines and equipment. All fire engines, apparatus and equipment, including hose, hose carts and hooks and ladders, belonging to or which may hereafter belong to any town, city or village in this state, and which are or may be kept and used for the protection of property in such town, city or village from fire, together with the engine houses and hooks and ladder houses for the protection of the same, and the lot or lots on which such engine and hook and ladder houses may be situated, when owned by any such town, city or village; and any lot or lots owned, used and occupied by any such town, city or village for corporate purposes.

(f) Life insurance and annuities.

1. In this paragraph, “ applicable date" means the earlier of the following:

a. The date on which the exemption is claimed.

b. The date, if any, that the cause of action was filed that resulted in the judgment with respect to which the execution order was issued.

2. Except as provided in subd. 3. and par. (j), any unmatured life insurance or annuity contract owned by the debtor and insuring the debtor, the debtor's dependent, or an individual of whom the debtor is a dependent, other than a credit life insurance contract, and the debtor's aggregate interest, not to exceed $150,000 in value, in any accrued dividends, interest, or loan value of all unmatured life insurance or annuity contracts owned by the debtor and insuring the debtor, the debtor's dependent, or an individual of whom the debtor is a dependent.

3.

a. If the life insurance or annuity contract was issued less than 24 months before the applicable date, the exemption under this paragraph may not exceed $4,000.

b. If the life insurance or annuity contract was issued at least 24 months but funded less than 24 months before the applicable date, the exemption under this paragraph is limited to the value of the contract the day before the first funding that occurred less than 24 months before the applicable date and the lesser of either the difference between the value of the contract the day before the first funding that occurred less than 24 months before the applicable date and the value of the contract on the applicable date or $4,000.

(g) Motor vehicles. Motor vehicles not to exceed $4,000 in aggregate value. Any unused amount of the aggregate value from par. (d) may be added to this exemption to increase the aggregate exempt value of motor vehicles under this paragraph.

(h) Net income. Seventy-five percent of the debtor's net income for each one week pay period. The benefits of this exemption are limited to the extent reasonably necessary for the support of the debtor and the debtor's dependents, but to not less than 30 times the greater of the state or federal minimum wage.

(i) Life insurance claims, personal injury or wrongful death claims.

1. Any of the following payments:

a. A payment to the debtor under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of that individual's death, to the extent reasonably necessary for the support of the debtor and the debtor's dependents.

b. A payment resulting from the wrongful death of an individual of whom the debtor was a dependent, in an amount reasonably necessary for the support of the debtor and the debtor's dependents.

c. A payment, not to exceed $50,000, resulting from personal bodily injury, including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent.

d. A payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent in an amount reasonably necessary for the support of the debtor and the debtor's dependents.

2. Any property traceable to payments under subd. 1. is exempt.

(j) Retirement benefits.

1. Assets held or amounts payable under any retirement, pension, disability, death benefit, stock bonus, profit sharing plan, annuity, individual retirement account, individual retirement annuity, Keogh, 401-K or similar plan or contract providing benefits by reason of age, illness, disability, death or length of service and payments made to the debtor therefrom.

2. The plan or contract must meet one of the following requirements:

a. The plan or contract complies with the provisions of the internal revenue code.

b. The employer created the plan or contract for the exclusive benefit of the employer, if self-employed, or of some or all of the employees, or their dependents or beneficiaries and that plan or contract requires the employer or employees or both to make contributions for the purpose of distributing to the employer, if self-employed, the employees, or their dependents or beneficiaries, the earnings or the principal or both of a trust, annuity, insurance or other benefit created under the plan or contract and makes it impossible, at any time prior to the satisfaction of all liabilities with respect to beneficiaries under a trust created by the plan or contract, for any part of the principal or income of the trust to be used for or diverted to purposes other than for the exclusive benefit of those beneficiaries.

3. The plan or contract may permit the income created from personal property held in a trust created under the plan or contract to accumulate in accordance with the terms of the trust. The trust may continue until it accomplishes its purposes. The trust is not invalid as violating the rule against perpetuities or any law against perpetuities or the suspension of the power of alienation of title to property.

4. The benefits of this exemption with respect to the assets held or amounts payable under or traceable to an owner-dominated plan for or on behalf of a debtor who is an owner-employee shall be limited to the extent reasonably necessary for the support of the debtor and the debtor's dependents.

5. This exemption does not apply to an order of a court concerning child support, family support or maintenance payments, or to any judgment of annulment, divorce or legal separation.

6. In this paragraph:

a. “Employer" includes a group of employers creating a combined plan or contract for the benefit of their employees or the beneficiaries of those employees.

b. “Owner-dominated plan" means any plan or contract that meets the requirements of subd. 2. and under which 90 percent or more of the present value of the accrued benefits or 90 percent or more of the aggregate of the account is for the benefit of one or more individuals who are owner-employees. For purposes of this definition, the accrued benefits or account of an owner-employee under a plan or contract shall include the accrued benefits or account of the spouse, any ancestor or lineal descendant, whether by blood or by adoption, or the spouse of such a lineal descendant, of the owner-employee under the same plan or contract.

c. “Owner-employee" means any individual who owns, directly or indirectly, the entire interest in an unincorporated trade or business, or 50 percent or more of the combined voting of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation, or 50 percent or more of the capital interest or profits interest of a partnership or limited liability company.

(k) Depository accounts. Depository accounts in the aggregate value of $5,000, but only to the extent that the account is for the debtor's personal use and is not used as a business account.

(m) Private property from execution against municipalities. All private property shall be exempt from seizure and sale upon any execution or other process issued to enforce any judgment or decree of any court that has been rendered against any county, town, city, village, technical college district or school district in this state.

(n) War pension. All money received by a person, a resident of this state, as pension, compensation, government insurance, or adjusted compensation, back pension, compensation or insurance from the U.S. government on account of military or naval service, and all other money received by a person on account of military or naval service from the U.S. government administered by the U.S. department of veterans affairs, whether the same is in the actual possession of such person, on deposit, or loaned.

(o) Tuition units. Tuition units purchased under s. 224.48.

(p) College savings accounts. An interest in a college savings account under s. 224.50.

(4) Tracing. Property traceable to property that would be exempt under this section in the form of cash proceeds or otherwise is not exempt unless expressly provided for in this section.

(5) Availability. A resident is entitled to the exemptions provided by this section. A nonresident is entitled to the exemptions provided by the law of the jurisdiction of his or her residence.

(6) Claiming exemptions.

(a) A debtor shall affirmatively claim an exemption or select specific property in which to claim an exemption. The debtor may make the claim at the time of seizure of property or within a reasonable time after the seizure, but shall make the claim prior to the disposition of the property by sale or by court order. Exempt property is not exempt unless affirmatively claimed as exempt. With respect to property partially exempt under this section, the claiming of an exemption includes the process of selection required of the debtor. The debtor or a person acting on the debtor's behalf shall make any required affirmative claim, either orally or in writing, to the creditor, the creditor's attorney or the officer seeking to impose a lien by court action upon the property in which the exemption is claimed. A debtor waives his or her exemption rights by failing to follow the procedure under this paragraph. A contractual waiver of exemption rights by any debtor before judgment on the claim is void. The court, in making a determination as to the extent property is reasonably necessary for the support of the debtor and the debtor's dependents, is not limited to the standard of living to which the debtor and the debtor's dependents have become accustomed. The court shall consider the amount and use of any income of any person claimed as a dependent when determining if that person is a dependent of a debtor.

(b) Notwithstanding sub. (13), this subsection does not apply to any of the following:

1. Public employee trust funds exempt under s. 40.08 (1).

2. Retirement benefits and allowances from retirement systems of 1st class cities exempt under s. 62.63 (4).

3. Retirement benefits and allowances from retirement systems of counties having a population of 750,000 or more exempt under chapter 201, laws of 1937, section 11.

4. A homestead exempt under s. 815.20.

(7) Valuation of property. The value of any property subject to exemption under this section shall be determined by agreement of the parties or by a commercially reasonable manner.

(8) Marital property rights. Each spouse is entitled to and may claim the exemptions under this section. If the property exempt under this section is limited to a specified maximum dollar amount, each spouse is entitled to one exemption. That exemption is limited to the specified maximum dollar amount, which may be combined with the other spouse's exemption in the same property or applied to different property included under the same exemption. The exemption under sub. (3) (h) may not be combined with the other spouse's exemption under sub. (3) (h) and applied to the same property.

(9) Partially exempt property. In the case of property that is partially exempt, the debtor or any person acting on the debtor's behalf is entitled to claim the exempt portion of property. The exempt portion claimed shall be set apart for the debtor, or for the debtor's dependents, and the nonexempt portion shall be subject to a creditor's claim. If partially exempt property is indivisible, the property may be sold and the exempt value of the property paid to the debtor or the debtor's dependents. Any proceeds paid to the debtor or to the debtor's dependents shall be exempt while held by the debtor or the debtor's dependents as cash or in a depository account.

(10) Fraudulent transfers. A conveyance or transfer of wholly exempt property shall not be considered a fraudulent conveyance or transfer. Property that is not totally exempt in value under this section may be subject to a fraudulent transfer action under ch. 242 to set aside that transfer to the extent that the property's value is not exempt under this section. If a court is required to satisfy the claim of a creditor and if that relief is demanded, the court may determine the manner of dividing fraudulently transferred property into exempt and nonexempt portions, or may order the sale of the whole property and an accounting of the exempt portion. Any or all of the exemptions granted by this section may be denied if, in the discretion of the court having jurisdiction, the debtor procured, concealed or transferred assets with the intention of defrauding creditors.

(11) Consumer credit transaction exemptions. The debtor may claim either the exemptions listed in s. 425.106 or the exemptions under this section for an obligation arising from a consumer credit transaction.

(12) Limitations on exemptions. No property otherwise exempt may be claimed as exempt in any proceeding brought by any person to recover the whole or part of the purchase price of the property or against the claim or interest of a holder of a security interest, land contract, condominium or homeowners association assessment or maintenance lien or both, mortgage or any consensual or statutory lien.

(13) Applicability to other property. Subsections (2), (4) to (7), (9), (10) and (12) apply to the following exempt property except as otherwise provided by law:

(a) Assistance benefits exempt under s. 49.96.

(b) Crime victim awards exempt under s. 949.07.

(c) Fraternal benefits exempt under s. 614.96.

(d) A homestead exempt under s. 815.20.

(e) Partnership property, as described in ss. 178.0203 and 178.0204.

(f) Public employee trust fund benefits exempt under s. 40.08 (1).

(g) Salary used to purchase savings bonds exempt under s. 20.921 (1) (e).

(h) Retirement benefits and allowances from retirement systems of 1st class cities exempt under s. 62.63 (4).

(hm) Retirement benefits and allowances from retirement systems of counties having a population of 750,000 or more exempt under chapter 201, laws of 1937, section 11.

(i) Tenant's lease and stock interest of a housing corporation exempt under s. 182.004 (6).

(j) Unemployment insurance benefits exempt under s. 108.13.

(k) Veterans benefits exempt under s. 45.03 (8) (b).

History: 1971 c. 154, 172; 1971 c. 211 s. 126; 1971 c. 229 s. 14; Sup. Ct. Order, 67 Wis. 2d 585, 761 (1975); 1975 c. 94 s. 91 (3), (5); 1975 c. 199; 1975 c. 359 s. 51; Stats. 1975 s. 815.18; 1979 c. 110 s. 60 (4); 1979 c. 191, 265, 355; 1985 a. 37; 1989 a. 56, 278, 359; 1991 a. 39, 221; 1993 a. 112, 399, 491; 1995 a. 27, 403; 1997 a. 39; 1999 a. 9, 44; 1999 a. 150 s. 672; 1999 a. 162; 2001 a. 10; 2003 a. 138, 304; 2005 a. 22, 441; 2009 a. 80; 2011 a. 32, 258; 2015 a. 237, 295; 2017 a. 59; 2017 a. 207 s. 5.

Sub. (31) [now sub. (3) (j)] does not violate Art. I, s. 17. North Side Bank v. Gentile, 129 Wis. 2d 208, 385 N.W.2d 133 (1986).

So long as a debtor initially files claimed exemptions within a reasonable time after seizure, and prior to disposition, nothing prohibits a debtor from amending the claim. Tralmer Sales & Service, Inc. v. Erickson, 186 Wis. 2d 549, 521 N.W.2d 182 (Ct. App. 1994).

The presence of a beneficiary-specific exemption in s. 16.641 does not mean that the general exemption in sub. (3) (p) is ambiguous. The general exemption statute is succinct and straightforward. Subsection (3) (p) applies to an account owner's interest in an s. 16.641 college savings account. In re: Bronk, 775 F.3d 871 (2015)

The referee did not abuse his discretion under s. 272.18 (30) (a) [now s. 815.18 (10)] in ruling that a debtor, by fraudulently concealing and transferring assets, forfeited any right to exemptions, only with respect to collection of trustee's judgment. In Re Schroeder, 356 F. Supp. 417 (1973).

An annuity does not have to comply with multiple provisions of the Internal Revenue Code (IRC) to qualify for an exemption under sub. (3) (j). “Complies with the provisions of the internal revenue code" in sub. (3) (j) 2. a. means eligibility to receive the tax deferral applicable to annuities under the IRC. Since the IRC taxes most income in one way or another, the critical issue in taxing an annuity is whether the taxpayer can benefit from deferred taxation of the implicit appreciation of the principal paid up front for the stream of later income. Accordingly, the most sensible reading of the statute is that the exemption under sub. (3) (j) should not depend on whether the annuity is taxable in accordance with the IRC but rather whether the tax is deferred in accordance with the IRC. Wittman v. Koenig, 831 F.3d 416 (2016).

Updating Wisconsin's exemption law. Ludwig and Pouros. Wis. Law. Aug. 1990.