As couples dissolve their marriages, they will also need to address both their shared property and their debt. As a community property state, Wisconsin has specific rules about how these can be divided.
What are the community property rules?
In states that follow the community property rule, most assets and debts acquired during the marriage are considered shared property and equally owned by both spouses. If the couple gets divorced, the shared property and debt are divided equally between them. Usually, property acquired before the marriage, as well as gifts, awards, and inheritances received by one spouse are considered separate property. This property remains separate and not considered for division. However, when the property is commingled, such as when separate funds are used to buy or maintain shared assets or separate assets are maintained by community funds, these funds or assets used might be considered part of the community property that will be divided.
How does the division happen?
While community property rules establish that shared or marital assets and debts must be divided equally between the spouses, the rules refer to the total value. When negotiating the division of property, spouses will need to consider several things, including:
• The total value of all the shared assets
• The total value of all the shared debt
• Which assets have become commingled and how they will be treated
• How the individual assets and debts will be divided so that each spouse can end up with their share of the total value
Some of the negotiations to achieve equal distribution of assets might mean having to give up interests in some assets to be able to keep others or having to sell the family home to split the proceeds. Similarly, couples will need to negotiate who will remain responsible for each individual debt or liability.