The difference between community and separate property

by | Feb 15, 2022 | Firm News |

Wisconsin is a community property state, meaning all marital assets belong to both spouses equally.

Understanding the difference between marital and individual property is essential, so you know what to expect in a divorce.

What items qualify as community property?

The state assumes that all assets are community property if spouses received or purchased it during the marriage. Typical examples of jointly owned property are:

  • All income of both spouses
  • Interest earned on savings or investment accounts
  • All real estate or investment properties
  • All items purchased during the marriage

The court divides these items into a 50% split between spouses.

Is any property considered separately owned in a community property state?

Anything an individual owns before marriage belongs to them. There are also some occasions when things received during marriage belong to one spouse. According to Wisconsin State Legislature, the following situations are exceptions to the community property rule.

  • Items purchased with individual funds that existed before the marriage
  • Personal injury payments, except as salary replacement
  • Inheritance or gifts from a third party
  • Appreciation on individually owned belongings

The burden of proof is on the spouse that owns these things. The courts require documentation proving separate ownership; otherwise, they consider it joint property.

Can personal property become community property?

There are instances when individual property becomes shared. When a spouse deposits income made during the marriage into a separate account, that account may be marital property. Also, if one spouse voluntarily contributes to the appreciation of an individually owned item, such as a home or car, the contributor may have an equal share of it.

Knowing how community property works in Wisconsin can help spouses make informed decisions about their belongings.