Wisconsin is one of a handful of “community property” states in the United States. Community property states assume equal ownership of property between married couples, which is called marital property. In Wisconsin, there are certain exceptions to marital property, such property acquired by a spouse through gift or inheritance, as long as such property is not mingled with marital property.
Wisconsin’s marital property laws provide a framework for managing spousal property rights in marriage, during a legal separation or divorce, and in the event of death. As such, Wisconsin’s marital property law can be used as a powerful tool in the context of estate planning, because it allows for certain marital property to be transferred to the surviving spouse without the need for probate. However, such a transfer is not necessarily automatic. The best way to take advantage of marital property law in the estate planning context is for married couples to create marital property agreements, as set forth in Wis Stat. § Chapter 766. Spouses have broad authority to structure their property ownership through such agreements. Sometimes marital property agreements are referred to as pre- or post-nuptial agreements (a “prenup” or “post-nup”), and they may be created before or during marriage.
Marital property agreements can be used for a variety of purposes, such as ensuring certain property remains individually owned in the event of marriage dissolution, establishing or eliminating spousal support, and simplifying estate planning through probate avoidance. Married couples may execute a marital property agreement in the context of estate planning to avoid probate through what are known as “Washington Will” provisions. They are so named due to their origin and use in Washington, another community property state.
Most commonly, spouses use marital property agreements in the context of estate planning to direct all assets to the surviving spouse upon death, without the need for probate, but Washington Will provisions also allow for non-probate transfers on death to other specific beneficiaries, such as children, trusts, entities, etcetera. This is opposed to a traditional Last Will and Testament in Wisconsin, which simply acts to provide instruction to the probate court for the purpose of estate administration. Probate is not necessarily a scary process, as it is a quite common step-by-step procedure, but simplifying administration by avoiding probate can help ease further burden for already grieving surviving spouses and families by reducing the expense and shortening the timeline to settle the decedent’s affairs. It is important to note that these provisions expire in the event of marriage dissolution, and may be revoked or changed at any time with the consent of both spouses.
If you are interested in pursuing a marital property agreement for asset protection and/or estate planning, please schedule an appointment with one of our experienced attorneys.