Wisconsin is among the minority of states that use the “community property” rule when it comes to marital assets and debts. Basically, everything you and your spouse earned, acquired, invested or bought after your marriage gets divided in half when you divorce.
Sounds simple, right? It can be. It probably is for the vast majority of people going through a divorce — but there are always exceptions. Here are a few important things to keep in mind when it comes time to negotiate the division of your assets and debts:
Before you and your spouse can begin to divvy things up, you have to sort your marital property from your personal property. Gifts that you gave each other, for example, may fall into “personal” property even if those gifts were given after the marriage began. Inheritances, if they were kept in the inheriting spouse’s name only, could also be distinct from the marital assets.
Debts have to be similarly divided into those that were acquired before the marriage and those that were acquired after. Things like student loans, for example, can be difficult to divide when some of them were taken out before the marriage, and others were taken after.
You and your spouse may find some advantage to negotiating the split of your marital debts and assets. Generally speaking, most people are happier when they control their economic futures instead of letting a court have the say. Courts sometimes take into account the length of the marriage, issues of marital waste or misuse of marital funds and a spouse’s physical health or earning capacity when they divide up assets, which can give you some room to negotiate.
When you and your spouse have recognized that a divorce is inevitable, it’s smart to take stock of all of the household’s debt and assets as soon as you can. That will better inform your strategy moving forward.