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Property agreements in Wisconsin largely consist of prenuptial agreements, postnuptial agreements, and cohabitation agreements. These are agreements that establish a plan for how to divide specific assets. Prenups and postnups are specific to marital arrangements and set aside assets to not be split the same as standard marital property. Then there are also cohabitation agreements which are becoming more popular. These are like prenups, but for unmarried people who are sharing a large asset.
Many property disputes don’t start with bad intentions. They start with misunderstandings. Property agreements create clarity and eliminate ambiguity around who owns what and how decisions get made. By putting terms in writing now you reduce unnecessary conflict later.
It can be said that every marriage has a marital property agreement. If you don’t write it yourself, you are electing to go by the state’s default marital property laws. Unfortunately, many people view marital property agreements as a demonstration of a lack of faith in the relationship. We think it’s better to define your wishes together as a couple than to have regrets if you ever need it but don’t have it.
Contrary to some common misconceptions, it’s not just the ultra-wealthy and famous that need a marital property agreement. Generally, a marital property agreement is advised for couples who have substantial discrepancies in income or assets. That discrepancy may be one partner owning a business, inherited assets, or property owned outside the marriage. That discrepancy may also come from one party stepping away from their career to focus on caretaking.
Marital property agreements are also recommended for marriages where there are children from previous partners. This prevents disputes between a surviving spouse and children from a different relationship.
A prenuptial agreement, or prenup, is a legal contract between two people about to get married that defines how property division and spousal maintenance will be handled in the event of the marriage ending. It does not cover child custody or child support.
It protects individual financial interests, including premarital assets, and overrides the Wisconsin state laws that govern property division in divorces where a prenup does not exist. For it to be valid, both parties must fully disclose their assets and debts. The prenup must be signed by both parties voluntarily and without coercion.
Prenups are designed to be financial agreements, so provisions regarding lifestyle restrictions, household chores, vacation arrangements, or other personal matters are often not enforceable.
A postnuptial agreement, also called a postnup, is very similar to a prenup except it is created after the marriage. It defines how assets, including debts and spousal support, will be handled if the marriage ends.
People often find a postnup beneficial if they were on financially equal footing before the marriage, but major changes have occurred. That may include one partner receiving a large inheritance or starting a business. Couples may also decide to create a postnup after major change in career trajectory, like one spouse becoming a stay at home parent. Like with a prenup, child custody or child support cannot be legally addressed in this document.
Marriages can end in divorce or death. Most people associate prenups and postnups with divorce, but it is necessary to consider both scenarios. When one person dies, probate usually only applies to assets owned solely in the deceased person’s name.
Marital property agreements can reclassify assets as separate property, which would necessitate them going through probate and potentially being passed according to the deceased person’s will or intestate laws rather than being automatically inherited by the surviving spouse. In the alternative, marital agreements can also classify a couple’s property as survivorship marital property, automatically passing it to the surviving spouse outside of probate.
Marital property agreements do not replace the need for a will or trust, but those separate legal documents should work in tandem and not conflict. An attorney can ensure these documents provide financial clarity for loved ones and don’t create unnecessary confusion.
Not all property agreements relate to marriage. Whether you are co-owning real estate with a sibling, investing in property with a business or romantic partner, or just want to make a simple transfer of property in the event of your death, a clear legally binding agreement is a good idea. It defines who owns what and what happens if circumstances change.
Transfer on death (TOD) deeds allow property to be transferred to a new owner, a named beneficiary, upon your death. This also allows the property to bypass probate, which makes it an attractive option for some people. It only impacts the specific property, not other assets, making it less comprehensive than trusts.
TOD deeds can become complicated if there are more than one beneficiary, as they generally don’t account for disagreements between beneficiaries about what to do with the property. They also do not protect your home from Medicaid estate recovery.
A TOD deed does not impact your ability to use or sell the property in your lifetime and can easily be revoked if you so choose. If you are not concerned about Medicaid and only have one beneficiary, this can be a good option as part of your estate plan.
A cohabitation agreement is between two (or more) unmarried parties who own property together. This could be between unmarried couples, friends, or siblings. It typically covers how home expenses will be covered by each partner and what ownership percentage each party has.
Cohabitation agreements also cover what happens if the living arrangement does not work out. It answers questions like who gets to keep the house and what the moveout procedure will be. It also covers buyout options and payment timeline details. The cohabitation agreement also covers what happens when one party dies. In particular, it is important to consider who gets the deceased person’s share of the property.
Purchasing property with an unmarried partner, friend, or relative is becoming more popular. A cohabitation agreement helps protect all parties involved and prevents messy situations later.
All property agreements aim to establish clear boundaries and reduce unintended consequences. A well-versed attorney from Grieve Civil Law can help you consider a variety of scenarios you may not have thought to account for.
