Protecting Separate Property in Wisconsin

Wisconsin is one of only nine community property states—and the only one in the Midwest. Under the Wisconsin Marital Property Act (ch. 766) and Wis. Stat. § 767.61, courts presume a 50/50 split of divisible property. The good news? Gifts and inheritances are excluded from division—unless doing so would cause "hardship." Whether you're facing an uncontested or contested divorce, understanding identity, character, and transmutation is essential to protecting what's yours.

What Qualifies as Individual (Separate) Property?

Under Wis. Stat. § 766.31 and § 767.61(2)(a), individual property includes:

• Gifts from third parties: Property acquired by gift from someone other than your spouse
• Inheritances: Property acquired by bequest, devise, descent, or by reason of death (including life insurance payouts, trusts, and survivorship interests)
• Premarital property: Assets owned before the "determination date" (the later of marriage, both spouses becoming Wisconsin residents, or January 1, 1986)
• Exchange property: Assets acquired in exchange for individual property
• Appreciation: Passive appreciation of individual property (unless marital labor caused the increase)

Important: All property is presumed marital under § 766.31(2). The spouse claiming individual status must prove it—and show the property can be traced to an excluded source.

Identity vs. Character: Wisconsin's Two-Part Test

Wisconsin courts analyze separate property claims through two lenses established in Wright v. Wright:

• Identity: Can you trace the gifted or inherited asset to its current form? If the chain is broken—through commingling or undocumented exchanges—identity is lost and the asset becomes marital.
• Character: Did the owning spouse intend to donate the property to the marriage? Evidence of donative intent (like joint titling) transmutes individual property to marital.

Both tests must be satisfied. Even if you can trace your inheritance (identity), joint titling (character) can still convert it to marital property.

Transmutation by Joint Titling: The Bonnell/Steinmann Trap

Under Bonnell v. Bonnell (1984) and Steinmann v. Steinmann (2008 WI 43), transferring separate property into joint tenancy is strong evidence of donative intent—and transmutes the entire asset to marital property:

• Joint deed: Deeding inherited property to both spouses transmutes it to marital
• Joint accounts: Depositing an inheritance into a joint account can evidence intent to gift to the marriage
• Difficult to rebut: Once jointly titled, proving no gift was intended requires strong contemporaneous evidence

This makes Wisconsin particularly unforgiving: using inheritance money for a jointly-titled home typically converts it to marital property, even though the same funds in a sole-name account would remain individual.

Commingling and Tracing Requirements

Under Wis. Stat. § 766.63(1), mixing marital and individual property reclassifies the mixed asset to marital unless the individual component can be traced:

• Direct tracing required: Document the chain from inheritance/gift to current asset with bank statements, account histories, and closing statements
• Unexplained deposits break the chain: If funds in a commingled account can't be explained, tracing fails (Estate of Lloyd)
• Interest and dividends: Income earned on individual property may be marital, even if the principal stays separate

Active vs. Passive Appreciation

Under § 766.63(2) and the Schorer v. Schorer doctrine, appreciation of separate property is treated differently based on its source:

• Passive appreciation stays individual: Market forces and inflation don't create a marital interest (Plachta)
• Active appreciation becomes marital: When a spouse's substantial, uncompensated labor causes substantial appreciation, the enhanced value is marital (Schorer; Spindler)
• Enhanced value, not dollars spent: The marital claim equals the appreciation attributable to efforts, not the hours worked (Estate of Kobylski)

The Hardship Exception: When Individual Property Can Be Divided

Wisconsin has a unique provision under § 767.61(2)(b): courts may divide individual property if refusing would create hardship on the other spouse or children. However:

• High threshold: "Hardship" means "privation"—not merely inability to maintain pre-divorce lifestyle (Doerr v. Doerr)
• Burden on requesting spouse: The party seeking division must prove financial privation would result
• Used sparingly: Courts rarely invoke this exception without extreme circumstances

No Date-of-Separation Cutoff

Wisconsin does not recognize a "date of separation" for classification purposes:

• Earnings after separation are marital: Wages earned while physically separated but before dissolution remain marital property
• Valuation at divorce: Assets are valued as of the divorce date, not separation (Long v. Long)
• Debts continue: Post-separation, pre-decree obligations are presumed family-purpose under § 766.55

Estimate Your Wisconsin Divorce Costs

Property disputes can significantly increase divorce costs, especially when tracing or valuation experts are needed. Wisconsin filing fees vary by county. Use our calculator to estimate your total expenses:

Practical Protection Strategies

• Never jointly title inherited property: Keep inherited assets in your name alone to avoid transmutation
• Maintain separate accounts: Don't deposit gifts or inheritances into joint accounts
• Document everything: Keep gift letters, estate documents, and account statements showing the source and growth
• Avoid unexplained deposits: Any unexplained funds in a commingled account can break your tracing chain
• Consider a marital property agreement: A prenup or postnup can explicitly classify assets under § 766.58

Key Takeaways

• 50/50 presumption applies: Wisconsin presumes equal division of marital property under § 767.61(3)
• Gifts and inheritances excluded: But only if you can prove identity and character
• Joint titling transmutes: The Bonnell/Steinmann doctrine makes joint title evidence of donative intent
• Tracing is essential: Commingled funds lose separate status if tracing fails
• Hardship can override: Courts may divide individual property in cases of privation
• No separation cutoff: Marital property accrues until the divorce is final

For the complete Wisconsin property division guide and divorce timeline, see our detailed resources. For official court forms, visit the Wisconsin Courts Forms Page.