I Hit the Jackpot! Does That Mean My Spouse or Ex-Spouse Did Too?

 

When someone wins the lottery, it can make headlines. When West Allis local Manuel Franco won the $768 million Powerball in April, it was big news for weeks. State lotteries are becoming a growing phenomenon, with the winnings often accruing well past the million-dollar mark. So, if you hit the jackpot, does that mean your spouse or ex-spouse did too?

Let’s talk lottery winnings and divorce. Say you’re in the middle of a contentious divorce, and the stress of it all has you on edge. You’re at the gas station filling up your car on the way home from work, and you feel like you need a win. So, you try your luck and buy a Powerball ticket. Unbeknownst to you at the time, that lottery ticket is going to make you a millionaire. The Wisconsin Lottery does the Powerball drawing, and you find out that your ticket won you the $400 million jackpot.

So, now you’re wondering – how does this big win impact my divorce?

The short answer is, those winnings are now property of the marital estate. Since Wisconsin is a community property state, the court is going to presume that your lottery winnings should be split equally. Although this may seem unfair, it is consistent with how family courts in Wisconsin split other assets (and debts) in a divorce. When considering the marital estate, the lottery winnings will go in the “assets” column of your estate, and your soon-to-be-ex will likely get a chunk.

Although Wisconsin is a community property state, that does not necessarily mean your spouse will necessarily get exactly half of the winnings. The court can unequally divide assets based on a variety of factors.  From an equitable standpoint, the court could decide that it is unfair to equally divide the lottery winnings based on the fact that the ticket was purchased after the divorce action was filed.  However, a recent case in Michigan found that the husband was required to pay the wife nearly one-half of his winnings under the same circumstances, finding that because he had regularly played the lottery during the marriage, the losses he incurred came from the marital estate so the winnings should be equally shared as well.

Further, the court will likely consider the “final” winnings from the lottery –even if you win a $400 million jackpot, there will be taxes and other deductions from that amount. So even though you win $400 million, it doesn’t mean your ex gets $200 million and you’re stuck having to pay the taxes and other deductions out of your share. Those should be split equally.

So, what happens if you aren’t in the middle of a divorce, but you’re paying child support to her pursuant to a court order from a prior divorce, or a paternity case?  Or, you aren’t divorced yet but you still would owe child support or possibly maintenance?

In situations where you are ordered to pay child support, the court generally weighs two factors when they set child support: your placement schedule, and your income. If you’re unsure how child support gets calculated, check our other blog posts for more information on calculating child support. So now you’re asking yourself – are my lottery winnings income? Those winnings aren’t regularly recurring (if you take the lump sum payout option), and you aren’t guaranteed future lottery winnings. How can they call lottery winnings “income”?

Unfortunately for you, the court can consider your lottery winnings as income when they calculate your child support. How they consider the winnings will depend (in part) on how you are being paid your winnings – did you take the lump sum payout option, or are you getting regularly recurring monthly payments of your winnings? If you are getting the regularly recurring monthly payments, then it is more likely the court will consider that “income” because it is regularly recurring and available for child support purposes. If, however, you take the lump sum payout, then it is less clear what the court will do. Child support is intended to “equalize” the households of both parents so that the children have similar experiences (and opportunities) at both parents’ houses. The court doesn’t want one parents house to the be “fun” house with lots of expensive gadgets and fancy food, and the other parents house to be boring. Clearly if one parent wins the lottery, the standard of living at their house is very likely to increase. Whether or not the courts would award the other parent a portion of your lump-sum winnings will likely depend on the facts specific to your case. It will also depend on the amount of winnings – if you win a $10,000 lottery, the court will look at those winnings differently than a $10,000,000 win.

Even though your winnings may be included for child support purposes, they may not be included for maintenance purposes.  The stated goal of maintenance under the law is to maintain your spouse at a standard of living enjoyed during the marriage.  Clearly, a large lottery jackpot is far above any standard of living that was enjoyed during the marriage.  There is a case in Wisconsin where the appellate court found that a post-divorce lottery win should not necessarily be grounds for an increase in maintenance to the other spouse for that reason.

The worst thing you can do, however, is to try to hide your winnings. Any time someone tries to hide assets during a divorce, the court could penalize that person by awarding the entire asset, or an unequal share, to the other party.  After all, one-half of $400 million is still $200 million dollars!

Navigating the family courts, whether its through a divorce of a paternity, can be complex. Introducing something like lottery winnings into the equation is likely to make things even more complicated. If you are going through a divorce of paternity case, contact the experienced attorneys at Nelson, Krueger & Millenbach, LLC at 414-258-1644 or at www.nkmfamilylaw.com for a free consultation to see what we can do for you.

 

 

Can the Court Award Custody of a Pet in Wisconsin?

 

When going through a divorce, the process is typically focused on the “big” issues. For most couples, this includes the division of assets and liabilities, support, and the custody/placement of minor children (where applicable). Most attorneys and judges are well versed in these issues because they are foundational to divorces.

A less common issue is what happens to family pets in the divorce. Are they considered “property” to be valued and accounted for in the division of assets and liabilities? Or are they more similar to minor children, and require a placement schedule for each party to spend time with the pet? According to the current applications of Wisconsin state law, pets are generally considered “property” and will be considered in the division of assets and liabilities. Although parties can agree to share the custody and placement of their pets, it is currently an uncommon practice in Wisconsin and courts are unlikely to approve or enforce an order which attempts to address custody of a pet.

While Wisconsin does not have laws pertaining to “animal custody”, a recent national trend in the law regarding pets may change that. A number of states, including Wisconsin, have enacted laws recognizing the need to include companion animals in domestic violence protective orders, with some going as far as ordering that abusers pay financial support for pets in the care of a victim of domestic violence.  Wisconsin Statute § 813.12(4)(a) states, part:

A judge or circuit court commissioner may grant an injunction ordering the respondent to refrain from … removing, hiding, damaging, harming, or mistreating, or disposing of, a household pet, to allow the petitioner or a family member or household member of the petitioner acting on his or her behalf to retrieve a household pet…

Further solidifying this trend in recognizing pets as more than property, Congress signed a law entitled the Pets and Women Safety (PAWS) Act in December 2018. The PAWS Act provides shelter and housing assistance for domestic violence survivors and their pets, service animals, and emotional support animals. This law recognizes that pets are more than simple property to their owners..

Although Wisconsin does not have any laws specifically granting custody rights to pets in a divorce or family law case, the court can still consider the facts unique to your case.  Even though the pet is considered to be property, if there is a dispute as to who receives the pet, some of the factors the court may consider are: who first purchased the pet; was it purchased during the marriage or before; who is primarily responsible for caring for the pet.  These are all factors worth considering, and although Wisconsin law doesn’t require family courts in Wisconsin to consider pets as more than property, legislation like the PAWS Act makes it easier for attorneys to argue that pets deserve special consideration in legal actions.

If you have a divorce or family law matter involving a beloved pet, contact the experienced legal team at Nelson, Krueger & Millenbach, LLC at 414-258-1644 or visit our website at http://www.nkmfamilylaw.com to set up a free consultation.

 

Marital Assets Often Overlooked in Divorce

Wisconsin is a marital property state, which means that all assets and debts that are a part of the martial estate are subject to a fifty-fifty division in divorce. Generally, it is fairly simple to identify marital assets and to determine how to fairly divide them. However, couples may overlook certain intangible assets when they are dividing the marital estate in their divorce.

Intangible assets may include credit card reward points, travel miles or hotel points, which are accrued during the marriage. Dividing these assets could be tricky given that they can be tied to the individual who was doing the traveling or tied to the credit card holder. One of the first steps to take when you and your spouse have credit card rewards, hotel points, or travel miles is to contact the company to determine their policy in dividing these assets. Remember, there may be fees associated with dividing these assets, so keep that in mind in determining how you would like to proceed. It is also important to keep in mind that some companies will not divide these rewards into two separate accounts.

However, many companies may assign a monetary value to the rewards points or travel miles.  If they do, you can determine if a buy-out of the other spouse’s interest in those rewards is the best option.  It may also prove helpful to assign a value to these rewards to gain a better perspective of how much you wish to argue over these assets. Determining the value may be difficult when the company that you have these rewards or points through does not assign a value.  In this case you may need help agreeing upon a value of these assets.

You may also want to consider how these assets were accumulated. For example, if you and your spouse have accrued a large amount of travel miles because you have a child attending college in another state, then agreeing to allocate the travel miles for the use of your child’s travel may be a creative way to resolve the conflict in dividing the travel miles. Or, perhaps there simply can be an agreement that the other spouse can use the miles to book a certain number of trips and how that will occur.

Another often overlooked asset are stock options or restricted stock options offered by one spouse’s employer. It is unusual for these options to be split between the parties, and usually requires either a buy-out of the value of the stock.  However, it can be very difficult to determine such value, or determining a method which would allow the non-employee spouse an opportunity to exercise the stock option through the employee spouse. There are several factors which also must be considered when dividing stock options, especially the tax consequences for both parties in exercising the options.

Another asset unique to Wisconsin that can be overlooked are Packers season tickets. It is common that season tickets be passed down generation to generation, and to be a highly coveted asset by Packers fans. If a spouse acquires Packers season tickets during the marriage, then those tickets are also subject to division as a marital asset, as they can stay in the family for years.

If you believe that you or your spouse have the types of assets as those mentioned above, or that you believe you need help identifying these assets and dividing them in your divorce, call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.

Prenuptial Agreements in a Divorce in Wisconsin

Ein Ehevertrag mit zwei goldenen Eheringen

Prenuptial, or Premarital, Agreements are legally binding contracts entered into by couples before they get married to each other. They are also called Marital Reclassification Agreements. The purpose of a Prenuptial Agreement is to opt out of marital property laws in whole or in part. Most prenuptial agreements establish the financial rights of each spouse in the event of a death or divorce. It is important to note, however, that unless a Prenuptial Agreement specifically discusses what happens in the event of a divorce, it does not necessary apply in a divorce.  If all requirements are met, however, prenuptial agreements are generally found to be valid in Wisconsin.

Some common circumstances where prenuptial agreements are entered into are when one spouse is significantly wealthier than the other spouse, when a spouse has children from a different marriage or relationship, when one spouse has a family business he/she wishes to protect from the other spouse in the event of divorce, or when one spouse has significant debt that the other spouse does not want to be responsible for in the event of divorce.

Pursuant to statute, Wisconsin law presumes that all assets shall be divided equally in the event of a divorce. However, a Prenuptial Agreement could overcome that presumption if it specifically addresses what happens in the event of a divorce and if the court determines that it is a valid Prenuptial Agreement that will be upheld in a divorce. Additionally, it is important to know that parts of a Prenuptial Agreement may be upheld by the court, while other parts may not be. The court has the discretion to uphold all, none or only parts of the Prenuptial Agreement.

When deciding whether to uphold a Prenuptial Agreement, the court must insure that certain requirements and standards are met in order for all or part of a Prenuptial Agreement to be enforced and upheld at the time of the divorce. Some of the factors that the court looks at to determine whether a Prenuptial Agreement should apply in a divorce are whether or not the agreements were fair at the time of the signing of the Agreement (i.e. did the parties knowingly and voluntarily enter into the agreement?), whether there was a complete financial disclosure by both parties, whether both parties had adequate legal representation and whether or not a Prenuptial Agreement is fair at the time of the divorce (i.e. has their been a substantial and unforeseeable change in circumstances?).

An example of a situation that may be scrutinized for lack of fairness at the time of entering the agreement is the following: When the husband-to-be is insisting on a Prenuptial Agreement and only presents it to the bride-to-be on the eve of the wedding day (guests have already come to town, non-refundable deposits have been paid). In that circumstance, the bride-to-be may sign the Agreement without sufficiently reviewing the Agreement, without fully understanding the Agreement and her rights under the Agreement and without fully grasping what she is giving up in the future. In the case, the court may decide not to apply a Prenuptial Agreement in a divorce.

If you have questions about a Prenuptial Agreement in a divorce, please call our office at 414-258-1644 to schedule a free half-hour consultation with an attorney.

Tax Considerations in a Divorce

Tax on dollar currency

Filing one’s taxes during or immediately after a divorce can be especially challenging. Before your divorce is finalized, there are a few tax considerations that should be addressed.  Addressing these issues prior to finalizing your divorce will help ease the transition during tax season post-divorce, and may help you avoid any negative tax consequences or an IRS audit. The following points should be considered during the divorce proceeding, and are important to discuss with an attorney or your tax preparer to determine the tax consequences of your divorce agreements:

  • When can you file as single, married filing jointly, married filing separately, or head of household, and which options offer the best possible benefits? Once your divorce is finalized, you are considered unmarried for the entire year of your divorce, this includes if you get divorced on December 31st. If your divorce is not finalized by December 31st, you will have to file your taxes as married filing jointly or married filing separately. There are rare occasions when you can even file head of household even though you are married.  Determining your tax filing status, should be done with the assistance of an experienced tax preparer with the goal of maximizing the best financial result to you and your spouse.  This may require you to work cooperatively with your soon-to-be-ex to determine the best means to file your taxes and to take advantage of the benefits offered by doing so.
  • Which parent can claim the child or children for the dependency exemption and take the applicable tax credits offered to parents? Generally, the parent with primary placement of the child(ren) may claim the child(ren) on their tax return. However, parties can negotiate who can claim the exemption in divorce cases or the court can order the same. It is imperative to include in the Marital Settlement Agreement an award of how each party shall claim the child(ren) on their respective tax returns.
  • What do parents need to claim the child(ren) as a dependent? Parents must complete an IRS Form 8332 “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent,” to allow the other parent to attach it to his or her tax return if they are claiming the child(ren) Form 8332 is the document that allows a parent to claim a child on his or her taxes even though he or she may not fit the requirements under IRS rules to do so.
  • Do I have to report child support as income? Child support payments are not deductible by the paying parent or taxable to the parent receiving the child support.
  • Can I deduct maintenance payments? Maintenance payments (or alimony) are generally tax deductible by the party making the payment, and must be claimed as income by the recipient. It may be helpful to include a reference to the federal tax code IRC 71 in your divorce decree can ensure that the parties are aware of their responsibilities regarding maintenance payments.
  • Do I have to pay taxes on assets awarded to me in my divorce? A property transfer between divorcing spouses does not create any additional tax liabilities, if it is ordered in the divorce decree.
  • Do I have to pay taxes on retirement assets awarded to me in my divorce? In order to avoid tax consequences when dividing a retirement account incident to a divorce, a Qualified Domestic Relations Order or QDRO, may need to be drafted after the date of divorce to instruct the retirement plan administrator to divide the benefits as ordered by the divorce decree. If the recipient spouse does not liquidate such funds and follows the IRS rules to invest such funds into a qualified plan, there are no tax consequences to such a transfer.
  • Will I be audited post-divorce? You risk being audited if you do one or both of the following: 1. both parents claim the same child on their taxes, 2. The amount of maintenance the recipient lists on line 11 of his or her 1040 does not match the number that the payor lists on line 31a. It is always good practice to speak to your ex-spouse before filing your taxes to make sure that you are claiming the correct child(ren) and that the amount of maintenance listed as received on your tax form matches the amount of maintenance paid.

There are several considerations in determining what options are best for you to maximize your tax benefits and to avoid any additional tax burdens after a divorce. Because each divorce is unique, it may be important to speak with an attorney or a tax professional to best address the tax consequences of your proposed divorce agreement before finalizing your divorce. If you are getting a divorce and have questions regarding the tax consequences of the issues outlined above, call us at (414) 258-1644 to schedule a free initial consultation to discuss your case.

How Does Bankruptcy Affect an Ex-Spouse After Divorce?

Finance series

Once your divorce is complete you expect that any financial ties you and your ex-spouse once shared are severed forever.  However, what happens when your ex-spouse defaults on a debt or files for bankruptcy and seeks to discharge debts that belonged to both of you during the marriage?  In marital property states such as Wisconsin, when a debt is incurred during the marriage, it does not matter if the debt is in one spouses name or the other.  Any debt incurred during the marriage is deemed to be a joint debt under marital property laws.   A judgment of divorce separates the debts as to the spouses, but not  as to the creditors.  If a spouse who was assigned a debt under the judgment of divorce defaults on said debt or files for bankruptcy, it is possible that the creditor will seek payment from the other spouse.   Creditors are not part of the divorce process and are not required to follow the terms laid out in the agreement.   So what do you do when a creditor comes after you for a debt that was assigned to your ex-spouse?

If you hired a proactive divorce lawyer, the answer to the problem is clearly laid out in your Judgment of Divorce.  A well thought out Marital Settlement Agreement will have language dealing with this type of situation.   Should a spouse default on a debt, then the Judgment of Divorce should have language which will allow you to seek remedies from your ex-spouse in family court.   Understand, this does not sever the responsibility you have to the creditor, but it will require your ex-spouse to pay you so you can pay the creditor.   Therefore, if a debt is discharged in bankruptcy and the creditor starts collection efforts against the non-bankrupt spouse, the non-bankrupt spouse can go back to family court to obtain an order for the bankrupt spouse to pay the discharged debt.   In Wisconsin, the court will often order maintenance or “spousal support” to assist you in re-paying the debt which was the responsibility of your ex-spouse.  If your divorce decree is silent with regard to this situation, you can file a contempt action against your ex-spouse in hopes of recovering the money you have to pay the creditor.

To further protect ex-spouses, the Bankruptcy Code was modified in 2005 which changed the type of debt that can be discharged.  Under the new law, if your ex-spouse filed a Chapter 7, a debt owed to a spouse that resulted from a Judgment of Divorce or any subsequent court order may not be discharged (i.e. property division, spousal support, child support arrears, payment towards children’s medical bills).

If a Chapter 13 is filed and completed, the rules are different and you must consult with a bankruptcy attorney to determine how your debt is affected.    If you find yourself in this situation where your ex-spouse files for bankruptcy, you may want to consult with a bankruptcy lawyer to confirm the whether your particular debt is dischargeable.

There are also times where as a result of a post-judgment motion the court orders your ex-spouse to pay you an amount of money as a result of a motion for clarification, contempt or reconsideration of the orders.  For instance, a court may order your ex-spouse to reimburse you for expenses related to the sale of a home or other asset, reimbursement for variable costs or even attorney fees.  Your ex-spouse will not be able to discharge these debts in Chapter 7 bankruptcy (the rules may be different for Chapter 13) and he or she will still owe you the debt after the bankruptcy.  It may be necessary to file a motion in family court to ensure your ex-spouse is specifically aware that his or her responsibility still exists.

Should you find yourself in a situation where a creditor is attempting collections from you and the debt is your ex-spouses responsibility under the Judgment of Divorce, contact Nelson, Krueger & Millenbach at 414-258-1644 to schedule a free initial office consultation to discuss your situation and options.

How To Divide Retirement Accounts in a Divorce

When divorcing, retirement accounts are often divided between the parties. In all cases where a retirement account needs to be divided, some type of affirmative action after the divorce is required to do so. Unless there are unusual circumstances or the parties agree otherwise, the account holder should NOT be required to cash out or liquidate his or her retirement account, either in whole or in part, to pay the other party what they are entitled to.

Many people make the mistake of assuming that this division will happen automatically, especially if they do not have an attorney. This is absolutely not the case. There are situations where, years later, the account holder retires and the other party wonders why they have not begun receiving payments. In fact, there was a recent case in Minnesota where the Wife lost her rights to the Husband’s pension because she failed to take any action to divide the account after the divorce. (For more information, see article here.)

There are several different types of retirement accounts which are divided in different ways. The most common type of retirement account is a “qualified plan.” The definition of qualified is set forth in federal law. However, these are most commonly the types plans such as 401(k)’s, 403(b)’s, deferred compensation or pensions. In order to divide one of these accounts, there needs to be a special order prepared called a Qualified Domestic Relations Order which is commonly referred to as a “QDRO.”

The processing of a QDRO can be complicated and lengthy. Essentially, a QDRO is prepared by an attorney or an outside firm who is hired for same. In Wisconsin, attorneys rarely prepare QDRO’s and usually hire an outside financial firm to do so. The QDRO is often sent to the plan first for pre-approval. Eventually, either before or after this pre-approval process, the QDRO is sent to the court for signature. Once the court signs the QDRO, a certified copy of this QDRO is required and then sent to the Plan for processing. The cost of the preparation of the QDRO is usually shared equally, at least in Wisconsin.

There are other plans which are non-qualified but which can also be or must also be divided by QDRO or by a different type of Order prepared separately from your judgment of divorce. Most often, for example, this applies to a TSP, FERS or other government retirement account.

Retirement accounts such as IRA’s, Roth IRA’s or annuities can often be divided without a QDRO. Typically, just the judgment of divorce and an internal form signed by the account holder is all that is necessary. The account holder should contact his or her Plan to determine what is required in these cases.

When a retirement plan is divided properly, there are no tax consequences or penalties to either party. Further, the receiving party is not dependent on the plan holder to pay him or her any monies that they are entitled to receive.

If you are divorcing or have divorced, it is imperative that you take all necessary steps to divide any retirement accounts awarded to you. If you don’t have an attorney and don’t know how to do this, it is well worth your time and money to hire an experienced divorce attorney to assist you with the division. If you do have an attorney, make sure that the division is done after the divorce. If not, you need to follow up with your attorney or hire another attorney to do so. Ultimately, it is your responsibility to make sure you that you receive what you are entitled to pursuant to the judgment of divorce.

If you are already divorced, it still may not be too late to divide a retirement account if this has not already been done.  However, the longer you wait, the more likely it is that there will be problems or that you could lose your rights altogether.  Contact an attorney immediately if you find yourself in this situation.

If you have any questions or concerns or need assistance in dividing a retirement account, please contact Nelson, Krueger & Millenbach, LLC (formerly Nelson & Davis, LLC) at 414-258-1644 to schedule a free initial consultation

I Moved Out Due to Divorce in Wisconsin. Why Can’t I Go Back To the House?

When one party moves out of the marital residence at the onset of a divorce case, there is often a lot of concern about why the other spouse ‘gets’ the house or why they can’t return to the house after they have moved out. Legally, just because one party moves out, does not mean that he or she is giving up any interest in the house. It just means that he may have given up his right to live there on a temporary basis.

If the Court has made a Temporary Order granting one party (ie husband) the temporary use of the house, the other party (wife) may not enter the house without the permission of the residing spouse. In this scenario, if the wife tries to enter the house without the husband’s permission  the wife could be held in contempt of court and face monetary penalties and even imprisonment.  It’s best to make sure that you have something in writing from your spouse or counsel, if you are entering the marital residence for any reason if your spouse was granted temporary use by the Court.

There are many instances when one party moves out before there is a court order, and then wants to return to the house later. Legally, if there is no court order barring you from returning to the house, you can return. However, you need to carefully decide what the consequences of returning to the house might bring.

For example, if your return to the house results in an argument, your spouse may call the police and you could be charged with disorderly conduct and potentially face being served with a domestic abuse restraining order if your spouse alleges domestic abuse or threats of it.

The court also will consider your actions at a hearing for Temporary Orders or other matters in the case. If you are returning regularly without notice to your spouse, if you are removing furnishings without agreement or if you are causing disturbances at the house, your behavior may be negatively inferred against you in issues involving custody, placement or property division. If you break a window or lock to enter the home, the Court could also hold you responsible for those costs and your spouse may seek a restraining order against you.

If you have moved out of your house and you want access to the house to retrieve personal property or any other reason, your best bet is to work with your attorney to schedule a date and time for you to enter the home and an agreement as to what you can remove. This will minimize conflict between you and your spouse and avoid police involvement and/or domestic abuse allegations against you in your divorce case.

Do remember though, that the restrictions go both ways. Just as you may not go into the marital property if you are restricted from it, your spouse cannot come to your apartment or new place of residence and demand access either. You both have the right to expect privacy and it is common courtesy to refrain from entering your spouse’s residence without permission, whether you own that property or not.  It helps to look at it this way: landlords cannot enter a tenant’s property without notice except in extreme circumstances and, once you move out, you essentially become the equivalent of a landlord to your spouse.

Dividing Personal Property in Divorce

“What? She gets the cabin AND the big screen TV?!”

 We’ve all heard the stories about nightmarish payouts during celebrity divorces (and Tiger thought that 9 iron to the temple hurt) as well as bitter fights over something as small as silverware. Personal property disputes during a divorce are common. Personal property generally refers to items such as furniture, tools, electronics and other items of value in your home.  Often, people attach much personal sentiment on these types of items of property.   Therefore, it becomes difficult to come to an agreement as to how to divide this property. As you can imagine, the longer the marriage, the more the memories, the tougher this task becomes. So how does it work?  How do you put value on property when the owner’s interpretation is clouded with personal attachment?

 Sometimes divorcing couples can come to an agreement regarding the division of personal property on their own or with some assistance from their respective legal counsel. Oftentimes, however, it becomes necessary to bring in a non-partisan expert who can accurately assess and appraise personal property at the forefront of the dispute. This can be an expensive endeavor (in Wisconsin, most personal property appraisals cost between $500 and $1,500) which yields disappointing results.  The expert who comes in to appraise your personal belongings does not care that the vase on the coffee table is great-grandma’s, nor does the expert care that you spent $8,000 on your home theater system five years ago.  The expert gives a subjective opinion as to the “rummage sale” value to your belongings. Therefore, great-grandma’s vase may only be valued at $20 and your home theatre system may not exceed $250.  Almost always there are values attached to items in a personal property appraisal that you will not agree with. 

 Also, the appraiser will not value every single item in your home.  They do not go through cupboards, drawers or boxes.  They usually will not climb up in your attic or climb over items stuffed into a garage.  They will only appraise visible items of value.  So, to some extent, it is up to you to catch missed items or point out items that you specifically want appraised ahead of time.

 Once the appraiser assigns values to these items, the party who has property of higher value must pay the other one-half of the difference.  However, the court or the other party cannot force you to accept items that you don’t want.  If there are items that neither party wants, the court will simply order that they be sold and the proceeds be divided.  Of course, there are then often issues with who will sell the items, at what price, etc.

 As a result of the above, when it comes to the division of personal property, it is best if the parties can agree how to divide everything.  Only you and your spouse are aware of the sentimental value that is attached to your personal belongings.   Only you and your spouse can reach an agreement that takes everything into consideration and is fair to both of you without going through the hassle, time and expense of an appraisal.

 To speak with an attorney understands all aspects of how personal property is valued or divided, contact us at 414-258-1644 to schedule a free initial office consultation or visit our website for more information.

 

What If My Ex-Spouse Doesn’t Pay Debts or Files Bankruptcy?

What if your ex-spouse doesn’t pay the debts he or she was ordered to pay in a divorce?  Or, what happens if he or she files bankruptcy?  Do you have to pay those debts?

Chances are you had some debt when you were divorce such as credit cards, mortgage, etc.  And, some of these debts were likely to have been joint debts.  Your divorce judgment should have allocated these debts and ordered one spouse or the other to pay them.  However, the thing you need to keep in mind is that your divorce judgment is only binding on the two of you – not your creditors.  Your creditors were not a party in your divorce.  Therefore, they don’t have to follow the court’s orders in your divorce judgment.

If your ex-spouse fails to pay debts he or she were ordered to pay, the creditor can still come after you for repayment.  Or, if your spouse files bankruptcy, you are still responsible for these debts as long as your name is still on them.  If you live in a marital property state, such as Wisconsin, you could even be responsible if your name is not on the debt although that doesn’t often happen.  You do have some options, however, to force your spouse to pay these debts.

While you should seek the advice of an attorney to make sure you are as protected as you can be, it is important that your divorce judgment should at least have language included which sets forth your spouse’s obligation to pay or refinance any debt which has your name on it and to not incur additional debt in your name.  It should state that you are “held harmless” from any of these debts.  And, there should be language that states that if you are held liable for any of his or her debts, that you have the right to come back to divorce court to seek reimbursement.  There are also additional provisions which can be included to even further protect you.  Many of the standard forms for final Agreements that are available to people who do not have lawyers do not have this extra language contained in them.

Even in the event of a bankruptcy, this additional language can protect you.  A bankruptcy action discharges the debt and responsibility between your spouse and the creditor.  However, your spouse still has a responsibility to you to pay the debts he or she was ordered to pay in your divorce.  Therefore, the divorce court retains jurisdiction to enforce that obligation if your judgment of divorce grants that authority to the court.

The court has several options available to it providing that the proper language exists in the judgment.  Primarily, the court can order repayment through garnishment or can even order maintenance or alimony to compensate you for any debt you may end up getting stuck with if your ex- fails to pay.  Sometimes the court will even order a lien or the sale of an asset to pay the debt.

If you are concerned about the payment of debts, you should definitely consult with an attorney to make sure the proper language is contained in your divorce judgment to protect you in the event your spouse fails to pay or files bankruptcy.  Even if you feel you cannot afford an attorney, the long term cost to you could be much greater if you get stuck paying debts that your spouse is ordered to pay.

To discuss your concerns about debt in your divorce in Wisconsin, contact our office at 414-258-1644 to scheduled your free initial office consultation or visit our website for more information.

Hiding Assets in a Divorce in Wisconsin

While no one likes to think they could be defrauded by their spouse, even under the worst circumstances, asset concealment during divorce is relatively common. Some spouses hide assets for purely financial reasons, perhaps fearing that they will not have enough to get by on after the divorce; others engage in asset concealment for other reasons, such as feelings of entitlement or a desire to seek revenge.

Divorcing spouses hide assets from one another in a wide variety of ways, ranging from highly sophisticated to deceptively simple. The following examples are just a few of the methods that a spouse may use to cheat a soon-to-be-ex out of a fair property settlement:

  • Temporarily transferring stock or other investment accounts into someone else’s name with the understanding that they will be transferred back after the divorce
  • Purchasing high-value items that are likely to be overlooked or undervalued, such as antiques or art
  • Deferring salary, commission, bonuses or other income to keep it off the books until after the divorce has concluded
  • Stowing cash or other assets in a safe deposit box, either in the home or elsewhere
  • Setting up a custodial account in the name of a child or other third party
  • Overpaying on taxes or other debts with the intent of receiving a refund after the divorce

To avoid losing out to a spouse’s asset-hiding scheme, it is important to stay involved in your finances at all stages of both marriage and divorce. Also watch for common warning signs that your spouse may be hiding assets, for instance if he or she:

  • Is secretive about financial affairs and does not share passwords and bank account information with you
  • Begins taking out unusual amounts of debt
  • Has financial statements and bills sent to a work address or private P.O. box
  • Opens multiple bank accounts for reasons that seem flimsy
  • Complains of sudden financial hardship, such as business failure, particularly if this occurs without a corresponding decrease in spending

 Hiding assets during a divorce to affect the outcome of the property division process is unethical and illegal in Wisconsin.  If a spouse hides or fails to disclose an asset worth more than $500, the court can impose severe consequences, including awarding that asset to the other spouse in its entirety.

If you are going through a divorce or are thinking about filing for divorce and suspect that your spouse may be hiding money or other assets from you, contact us at 414-258-1644 to schedule a free initial office consultation or visit our website for more information.

Appraisal of Assets in a Divorce in Wisconsin

There are often disagreements in a divorce about the value of certain assets.  Most commonly, this involves real estate and personal property.  However, the value of a pension or a business also may be at issue.  Although the below information may also be relevant in other states, this article specifically applies to divorces in Wisconsin.

If the parties do not agree on a value, the only option is to have the asset appraised.  If there is a dispute, the court must have a reliable source for a value.  The court will not consider the opinions of either party because there is no real basis for their opinion.  The only way to have a reliable value is to have an expert conduct an appraisal.  Usually, the parties agree on an appraiser or the court will appoint one.  The parties then usually share in the cost.  It is always preferable to have a mutually agreed upon appraiser or a court appointed one so a situation does not arise where there are “dueling appraisers”.  This saves everyone time and money.

For real estate, there are many reputable appraisers around and each judge always has a few that he/she prefers.  As long as they are a licensed appraiser, the court will usually accept them as an expert.  Once the appraised value is determine by a neutral expert, it is very difficult to contest that value except if there is an obvious error.  If you want to object to the value, you would have to hire your own expert to testify.  This is very rare and most real estate appraisers are at least in the ballpark in terms of value.

Appraising personal property is tricky.  It is very difficult to accurately determine the fair market value of things like TV’s, furniture, etc.  Of course, the value of those items is what someone is willing to pay for them such as in a rummage sale or on Craig’s List.  Even if you only recently purchased an item, it loses resale value almost immediately.  It is also virtually impossible to itemize every single thing in a home.  There are always items that are missed or overlooked.  Appraisers do not go pawing through boxes or drawers.  There are also very few individuals who conduct these appraisals because they are time consuming and difficult.   Attorneys usually encourage their clients to resolve this issue.  However, if you absolutely can’t, an appraisal is necessary.  Most people are not happy with the results but it is the best we can do under the circumstances.

Specialized items of personal property are often appraised separately.  These items included guns, jewelry, antiques, artwork and unusual equipment or artifacts.  An appraiser with specific experience with these items is necessary.  Depending on the item and where you reside, it is often difficult to find someone and sometimes it is required to look outside of your area or even your state.  You would then need to pay for that person to come to you or ship/transport the items to that person at their location.  This becomes very time consuming and costly.

If you have a pension, this may also need to be valued.  Pensions are defined benefit plans which provide a monthly benefit to you when you retire.  Pensions often vary greatly and have different rules, policies and procedures.  An actuary or accountant can calculate the present value of that pension.  However, the calculation is based on your life expectancy and an estimated length of time that you will collect that pension.  You may live much less or much longer than your life expectancy pursuant to current actuarial tables.  Therefore, a pension evaluation is basically an educated guess. However, sometimes it is necessary if a person wants to buy out the other spouse’s share of the pension or offset it against another asset, such as a marital residence.

Lastly, a business can be appraised or valued as well.  There are many different ways to do so and an expert is required to conduct this appraisal or value as well.  For more information about a business valuation, see our blog post on this topic:  How Is a Business Valued in a Wisconsin Divorce Case.

To discuss your assets in your divorce and how they may be valued or appraised, please contact us at 414-258-1644 to schedule a free initial office consultation or visit our website for more information on property division.

What If I Need to Hire an Expert in My Wisconsin Divorce Case?

In a divorce case, there can often be a need to hire experts to assist with specific issues.  Those experts might help with valuing assets (real estate, a business, personal property, pension, etc.) or provide testimony regarding one party’s earning capacity or ability to parent.

In Wisconsin, the Court may appoint an expert to accomplish this or a party may hire an independent expert.  If the Court appoints an expert, the Court will determine the responsibility for the expert’s fees which is generally an equal division.  The fees for an expert hired independently by one party will be that party’s sole responsibility.

An experienced family law attorney will assist you with finding the right expert for your needs.  There are often lists of experts regularly appointed by the Court in a given county.  These lists can be made available to family law attorneys and are very helpful in us finding the best match for your expert testimony needs.

To schedule a free initial office consultation to discuss hiring an expert your divorce, please contact us at 414-258-1644 or visit us at Nelson, Krueger & Millenbach, LLC  for further information.

How Is a Business Valued in a Wisconsin Divorce Case?

When a divorce action involves ownership of a business, the Court must determine what will happen with the business.   The first step is to determine the value of that business.   An experienced family law attorney will help you hire the appropriate expert with the necessary qualifications to value the business.   In a Wisconsin divorce case, the parties can agree on an expert o r the Court can name one expert to value the business.  A party may also hire an independent expert to value the business.  If the Court names the expert or if the parties agree to one, the parties then typically share the cost of the valuation.

The expert will provide a list of necessary documents, such as tax returns and profit/loss statements, which are needed in order to determine the business’ value.   The owner or operator of the business will be required to turn over all of those documents.  If there are assets of the business, like equipment, inventory, or vehicles, a separate expert or appraisal may be needed to determine the value of those assets.

Once the expert has determined a value of a business, the parties can use that information when dividing all of the assets in a divorce.  If a party does not agree with the value, they are free to hire their own expert to conduct an evaluation.  However, the Court ordered expert is usually given more deference at trial in terms of his or her opinion.

To schedule a free initial office consultation to discuss the valuation of a business in your divorce, please contact us at 414-258-1644 or visit us at Nelson, Krueger & Millenbach, LLC for further information.

-Alison H.S. Davis

Can I Keep My Inheritance in a Divorce in Wisconsin?

This is a question we often hear in a divorce action.  Inherited and gifted monies are exempt from division in a divorce in Wisconsin.  If you have kept these funds separate, in your own name, there is a high probability that you will be able to keep any gifts or inheritances in a divorce.  Sometimes, the court can divide these funds in unusual circumstances for “equitable reasons” but that is a fairly rare occurrence.

However, disputes arise when inherited or gifted funds have been “co-mingled” into a marital asset.  For example, if the funds were deposited into a joint account or were used to purchase a marital home.  In these situations, the nature of the funds have been transmuted into a marital asset.  Often, the individual receiving the inheritance or gift wants those funds back at the time of the divorce.  The current state of the law on this topic is that there must be “donative intent” on the part of the spouse who received the inheritance.  In other words, is there sufficient evidence that the spouse intended to give his or her inheritance to the marriage or to the other spouse?

This inquiry is very fact specific.  The court would look at the details of the marriage and the actions of both parties to make this determination.  In reality, however, family court is a court of equity and strives to arrive at a result that is fair and equitable to both parties.  Depending on when the inheritance was received and where the funds were spent or deposited, the court will sometimes give credit for co-mingled inherited or gifted funds.

For further details, please see our website at Nelson, Krueger & Millenbach, LLC or contact us for a free initial office consultation.

Teri M Nelson

Do I Have to Pay My Spouse’s Credit Cards in Wisconsin?

Wisconsin is a marital property state.  Therefore, all debts of the marriage are the equal responsibility of both parties.  Any creditor can seek reimbursement from either spouse either through a garnishment or attaching marital assets.  One way you can protect yourself from the debts of your spouse is to file for divorce or legal separation.  The court in Wisconsin will then divide and allocate responsibility for the debt which exists at the time of the judgment. After a divorce or legal separation is granted, you are no longer responsible for the other party’s debts.

In the context of a divorce or legal separation, all property and debt is presumed to be equally divided at the time of the judgment in Wisconsin.  But, what if one spouse is responsible for incurring more of the debt, such as credit card bills?  What if you didn’t even know about those credit cards?  Many people ask in that situation, do I have to pay my spouse’s credit cards in a divorce in Wisconsin?

We often see a situation where there is a large amount of credit card debt or business debt of which one spouse was unaware.  However, there are different explanations for this.  Sometimes, a person is irresponsible or has a spending addiction.  On the other hand, there are situations where one spouse controls the money and refuses to give the other spouse money which leads to having to use credit cards just to buy the basic necessities.

The court will look at the details of your case when deciding whether the presumption of an equal division of debt should apply.  If the debt is generally for “marital purposes” such as clothing, food, gas, etc., then the court will still generally order that credit card debt to be equally divided.  On this issue, Wisconsin courts have ruled that a marriage is a partnership.  In many marriages, spouses often disagree about certain issues.  Spending is one of them.  Some people are savers and some are spenders.  Even though you may not have always agreed during your marriage that your spouse should have been using the credit cards or charged more than you thought was appropriate, does not mean that you are not responsible for that debt upon divorce.

However, if the credit card debt resulted from what is called “marital waste”, then the court may deviate from that equal presumption.  Marital waste is defined as dissipation of marital assets for a non-marital purpose.  This could be spending related to gambling, drugs and alcohol or even related to an affair.  In these situations, the non-incurring spouse will most likely not be held responsible for that debt.

There are situations which do not fall neatly into one of these two categories (marital waste v. non-marital waste).  In those cases, the court will have to take a close look at all of the facts and circumstances when making a decision as it is required to consider a result which is fair and equitable to both parties.

For more information, please see our website at Nelson, Krueger & Millenbach, LLC.

Teri M Nelson

Property Division in a Divorce in Wisconsin

Wisconsin Property Division FAQ’s

HOW WILL OUR PROPERTY AND DEBTS BE DIVIDED?

The presumption in the State of Wisconsin is that all property and/or debts of the parties will be divided equally. This presumption can be overcome based on the following factors:

(a) The length of the marriage

(b) The property brought to the marriage by each party

(c) Whether one of the parties has substantial assets not subject to division by the court.

(d) The contribution of each party to the marriage, giving appropriate economic value to each party’s contribution in homemaking and child care services (e) The age and physical and emotional health of the parties

(f) The contribution by one party to the education, training or increased earning power of the other

(g) The earning capacity of each party

(h) The desirability of awarding the family home or the right to live therein for a reasonable period to the party having physical placement for the greater period of time.

(i) Maintenance and/or family support orders

(j) Other economic circumstances of each party

(k) The tax consequences to each party

(l) The previous written agreement of the parties

(m) Other relevant factors

The attorneys at Nelson, Krueger & Millenbach LLC will be able to evaluate the facts of your case and advise you as your assets and debts will likely be divided in your divorce action.

WHAT IF MY SPOUSE HAS EVERYTHING IN HIS/HER NAME?

Wisconsin is a marital property state which means that each spouse has a one-half interest in all property and/or debts acquired during the marriage. There are only a few exceptions such as inherited or gifted property. As a result, title, or in whose name an asset or debt is held, is largely irrelevant in the State of Wisconsin.

WHAT IF I HAVE RECEIVED GIFTED OR INHERITED PROPERTY DURING THE MARRIAGE?

Generally, property that is inherited or gifted is not subject to division in a divorce but there are exceptions. How gifted or inherited property is divided depends on what was done with that property after it was received. For example, if you inherit a sum of money and keep it separate from marital property, you will most likely be able to keep that inheritance. However, if you take your inheritance and use it for a down payment on a marital home, the court will most likely consider that marital property and divide it. Sometimes, though, the court will give a party credit for assets brought to the marriage, including inherited or gifted money.

WHAT IF THERE IS A DISPUTE ABOUT THE VALUE OF CERTAIN PROPERTY?

Often times it is necessary to have property appraised to determine a value. The court usually appoints an appraiser or valuator as an expert in those cases and orders that the parties split the cost for that expert. Each party is also entitled to hire their own independent appraiser or valuator as well.

HOW ARE PENSIONS OR RETIREMENT ACCOUNTS DIVIDED?

Again, the presumption in Wisconsin is that all property, including retirement accounts, will be divided equally. For most 401(k)’s, pension plans, retirement accounts or IRA’s, it is necessary to file with the Court a special order called a Qualified Domestic Relations Order (called a “QDRO”) which effectuates a division of those accounts. For some retirement accounts, such as military, state or county pension plans, QDRO’s do not apply and other special orders are required. If these type of retirement benefits exist, a lawyer or accountant is the most qualified person to assist with the division of the same.

Experts can also be hired to value retirement assets such as pensions. The court usually appoints an appraiser or valuator as an expert in those cases and orders that the parties split the cost for that expert. Each party is also entitled to hire their own independent appraiser or valuator as well.

WHAT IF I OWNED PROPERTY BEFORE I WAS MARRIED? CAN MY SPOUSE GET HALF OF THAT?

In Wisconsin, there is no exemption allowed for pre-marital property. All property (and debts) owned by either party becomes marital property at the time of the marriage. Therefore, all property is equally divisible at the time of divorce, except for gifts or inheritances as stated above. However, the court does have discretion to deviate from an equal division of the property based on the factors listed above, one of which is “contributions to the marriage.” This deviation is more likely in short term marriages or where one party brought significant assets into a marriage, but the court must consider all of the circumstances when making this decision.

WILL THE COURT ENFORCE OUR PRE-NUPTIAL AGREEMENT?

Wisconsin law states that a pre-nuptial agreement is binding on the court unless the terms of the agreement are inequitable as to either party and do not follow Wisconsin law. It is important that parties seeking a pre-nuptial agreement seek the assistance of a knowledgeable attorney prior to signing such an agreement.

WHAT IF MY SPOUSE ACCUMULATED A LARGE AMOUNT OF DEBT WITHOUT MY KNOWLEDGE? AM I RESPONSIBLE FOR HALF OF THE DEBT?

Because Wisconsin is a marital property state and the presumption is for an equal division of property and debt, the answer would be yes. Again, there are exceptions. For example, if the debt accumulation was due to a spouse’s addiction, such as gambling, drugs or alcohol (marital waste), the court usually relieves the other party from those liabilities. There are other situations where you may not be responsible for debt acquired solely by the other party. Your attorney at Nelson, Krueger & Millenbach, LLC can review the facts of your situation and advise you as what they believe to be the likely result in your case.

WHAT IF MY SPOUSE DOESN’T PAY DEBT THAT HE/SHE AGREES TO PAY OR THAT THE COURT ORDERS HE/SHE TO PAY?

Unfortunately, creditors are not bound by family court orders. As a result, they may seek payment from you on a debt that your spouse was ordered to pay. The only recourse you would have would be to file a contempt motion with the family court for your spouse’s failure to pay. Most often, the court will order remedies which may include an income assignment to you for any amounts your spouse failed to pay.

WHAT IF MY SPOUSE (EX-SPOUSE) FILES BANKRUPTCY?

If your spouse files bankruptcy, you would be responsible for the entire amount of any debt he/she is discharged from. Typically, however, this only applies to joint debts. If a debt is in one party’s name alone, the creditor doesn’t often seek repayment from a non-debtor spouse although it does happen on occasion. Again, your remedy would be to file a contempt motion in the family court as stated above. A debtor cannot discharge support obligations but may be able to discharge a property settlement payment in certain situations.

WHAT IF I DECIDE AFTER MY DIVORCE THAT THE PROPERTY/DEBT DIVISION WAS UNFAIR AND I WANT TO CHANGE IT?

The court does not have the authority to change a property division order after the date of the final divorce unless a party files a Motion to Reopen and the court grants that motion. The court will only reopen a judgment for very limited reasons such as mistake, fraud, inexcusable neglect, new information or other equitable grounds. A Motion to Reopen must be filed with a one year from the date a discovery is made of a mistake, fraud, inexcusable neglect that occurred in the final divorce. However, please be aware that it is very difficult to reopen a final judgment and such a Motion is very rarely granted.