Divorcing couples means dividing property

Estimates suggest that more than 2,500 couples divorce each day in the United States. While that represents a lot of heartache, it also represents a lot of headaches when it’s time to divide the household. And oftentimes couples find that the more the heartache, the bigger the headache.

That’s because decision-making can be difficult when emotions run high. It’s important to be able to think rationally about property division. If you can’t, you’ll have a third party — the courts — making those decisions for you.

Here are the basics you need to know.

Wisconsin is a community property state. That means all property, with limited exceptions by statute or prior agreement, is jointly owned by both partners. It also means that both partners are jointly responsible for debt.

The filing date matters. Even though both parties are jointly responsible for marital debt until the time the divorce is finalized, courts will take note of debt accumulated between the filing date and the divorce date. In fact, the divorce filing includes a requirement that neither party incur debt or dispose of property until the divorce is final.

Use doesn’t mean ownership. Wisconsin has a statutory 120-day waiting period before divorces can be finalized. During that time, couples will have rules (sometimes imposed by a family court-issued temporary order) concerning use of certain property. One partner may have use of the family home or use of the truck, but that’s “allocation of use,” not ownership.

Exceptions apply. As with any rules, there are exceptions. One of the clearest exceptions to community property is inherited property. If one of the partners receives a gift through inheritance and never comingles it with marital property, it is not subject to division. For example, if you receive a $5,000 inheritance from a parent and use it as a down payment on a house you purchase with your spouse, it becomes marital property. If instead, you deposit the $5,000 into a separate account in your name and keep it there, it would typically remain your individual property.

Short-term marriages are different. Though short-term is not well defined, couples married fewer than five years may be able to retain ownership of property they brought to the marriage. If you own your own home and bring a well-funded IRA to the marriage, for example, you may be able to retain ownership of that property after the divorce.

If your spouse, however, sold property upon entering the marriage and you together used the proceeds of that sale for travel, home improvements or some other joint purpose, the court wouldn’t likely let your partner walk away empty-handed.

Income is income; property is property. When it comes to property, the court will want to assure it was divided evenly. When it comes to income, however, the court will want to see that it is divided fairly. Income is relevant for issues of maintenance (alimony), debts and especially child support. Child support is set by an established formula based on the income of both parents. In determining maintenance and debt, courts will look at each partner’s income, self-sufficiency, age and financial condition, along with the couple’s standard of living during the marriage and other factors to attain fairness.

If you can’t agree, the court will decide for you. Much like parents with squabbling siblings, family courts would rather see couples negotiate their own property settlements. But when you can’t, the court will intercede and decide for you. Clearly, it’s in your best interest to figure out what’s best for you.