1. Tenants in Common

Taking title to real estate as tenants in common is sometimes a deliberate choice or can be the default when no other method is specified. In a tenancy in common, two or more people can share ownership rights to real property with each owner having a right to use and possess the entire parcel, regardless of the fractional share each owner paid. So, for example, if A pays $40K and B pays $60K for the property, this does not mean that B gets to divide the property up consistent with his 60% share and exclude A from it. Rather, both A and B must share the entire property.
The 50/50 rule applies to most aspects of a tenancy in common. For example, owners are equally responsible for maintenance costs and taxes. Only one property tax bill will be issued for the parcel, thus it is the responsibility of the parties to divide costs up as they see fit. The most efficient way to do this is through a tenancy in common agreement. Further, each owner is said to own his or her interest “severally”, meaning that he or she is free to sell or dispose of his or her interest, and no consent of the other co-owner is necessary to do so. It is easy to see some of the pros and cons of a tenancy in common, compiled below:

Pros of a tenancy in common:

• Allows individuals to pool their resources so that they can afford property,

• Each party can own different sections of the property if specified by a tenancy in common agreement, and

• Property taxes and other expenses are split between all owners

Cons of a tenancy in common:

• There are no survivorship rights in a tenancy in common, which means that when one owner dies, his/her share does not pass to the other owner, but rather to the decedent’s estate,

• Each owner must share the entire parcel with the other owner, unless the parties agree otherwise, and

• Owners may end up with unanticipated co-owners as a result of each owner’s right to freely transfer or sell their interest or when one owner passes away.

2. Joint tenancy

A joint tenancy, like a tenancy in common, allows two or more people or entities to share a property equally. However, unlike a tenancy in common, joint tenants have survivorship rights, meaning that if one owner dies, his or her share passes to the remaining owner or owners.
Joint tenants, like tenants in common, must share the entire parcel with the other owners. There is still the option of drafting a joint tenancy agreement to fractionally divide each owner’s share. However, there are some unexpected nuances here. For example, if joint tenants agreed to fractionally divide the parcel and one joint tenant decides to lease his or her share, most would presume that the owner offering the lease gets to keep all proceeds from the lease. However, this is incorrect – the typical presumption is that the lease proceeds must be split 50/50 or equally with the other owners.

Pros of a joint tenancy:

• Survivorship rights when one owner dies; his or her interest passes to the remaining owner(s), thus affording the opportunity to become a sole owner,

• Each owner can own specified sections of the property if specified by a joint tenancy agreement, and

• Property taxes and other expenses are split between all owners

Cons of a joint tenancy:

• Each owner must share the parcel with the other owners, unless the parties agree otherwise, and

• Equal rights and responsibilities of all owners mean that if one owner takes a loan out against the property, all co-owners may responsible.

3. Marital property

Wisconsin, being a marital property state views all property as owned by the marriage, not each individual in it. Thus, each spouse automatically owns a ½ share of all property acquired in the marriage, unless a marital property agreement specifies otherwise. For Wisconsin transplants who have acquired property out-of-state before moving to Wisconsin, property is recognized as quasi-community property, which is complex and helps courts determine how to divide property upon divorce or death.
Marital property, like property taken in joint tenancy, has survivorship rights. In the marital context, this means that if one spouses dies, the surviving spouse receives the deceased spouse’s half of the property. A common example is a home held in title as marital property. If both spouses are on the deed to the home, then the entire home goes to the surviving spouse. Depending on each couple’s situation, this may be either a pro or a con. Some of these pros and cons are outlined below:

Pros of marital property:

• Survivorship rights: If one spouse dies, his or her share goes to the surviving spouse

Cons of marital property:

• Frustrated interests: If one spouse wants to sell, but the other does not, it can cause a gridlock on being able to sell the property. Both spouses need to agree to sell.

• Even if one spouse was the one to acquire the property at first, the other spouse may acquire a ½ share if the property is used as a primary residence or marital funds are used to pay or upkeep the property. This can be a con in the context of divorce or estate planning.

Summary:

Now that you understand the three ways co-owners can take title to property and the cons that may arise when co-owners interest become frustrated, you may be wondering what solutions are available when co-owners cannot come to an agreement.

One option is asking the court to petition the property, which will be discussed in our upcoming blog post. Stay tuned and read on!

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Wills

If you have a will that was drafted in a different state before moving to Wisconsin, it will still be valid so long as it satisfies Wisconsin’s requirements of a valid will. These requirements include having the will in writing and having at least two disinterested witnesses at the time of signing.

In Wisconsin, your will may be changed through a codicil, which allows an individual to make amendments or changes at any time during their life. Some reasons that you may need a codicil to your will after moving to Wisconsin include, but are not limited to, changes to property, location of assets, location of beneficiaries, etc. For example, you may need to change the executor of your will if they live out of state. This is not only for practical reasons, in that the executor may have to handle matters in the decedent’s state, but also because Wisconsin law requires nonresidents to appoint an in-state resident to accept service of process and further, non-residency itself may be enough to disqualify an executor. See Wis Stat § 856.23.

Trusts

A living trust, also known as a revocable trust, is transferrable between states. However, it is important to speak with an attorney to update your trust to include any new assets and discuss whether moving your trust’s situs, aka its home, is advisable. On the other hand, an irrevocable trust’s situs may or may not be transferrable depending on the language of the trust. You should speak with an experienced estate planning attorney to understand the implications of having your trust’s situs in or out of state.

Similar to wills, it is advisable to have your trust’s situs as your state of residency. This is because unlike wills, which are attached to a person, trusts are entities governed by their respective state’s laws. Having a trust in a state other than your state of residency may require that your successor trustee hire an attorney in the state of the trust’s situs. Speaking with an attorney regarding your trust’s situs can help you understand other implications such as state fiduciary and inheritance taxes.

Transfer on Death Deed

A transfer on death deed allows property to be transferred to your beneficiaries without going through probate. If you have an existing transfer on death deed, it may need to be tweaked to reflect Wisconsin’s marital property laws. Moving to Wisconsin may make you to reconsider who is the beneficiary of your transfer on death deed. If it is the case that the beneficiary no longer seems appropriate, then you should speak with an attorney to revoke the deed and/or draft a new one.

Powers of Attorney

Your estate planning will typically include two kinds of powers of attorney (POA) – a financial power of attorney and a heath care power of attorney. The authority of someone granted to serve as a power of attorney is acknowledged in all states. However, moving is a perfect time to re-examine your agent selection. Wisconsin has adopted the Uniform Power of Attorney Act (UPOAA), along with 25 other states, which streamlines the laws governing POA’s. So, if your POA was created in a state that has not adopted the UPOAA, your POA could be challenged, and you should consult an attorney to clarify agent and grantor responsibilities.

Contact us today for a consultation at 262-725-0175 or our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has three office locations: Lake Geneva, Delavan, and Salem.

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Consider asking yourself these three questions to help determine whether to file for bankruptcy or divorce first:

Filing bankruptcy jointly before divorce saves money. When you file a Chapter 7 jointly, you only have one case, which allows you to split court and attorney’s fees between you and your spouse, rather than bearing the burden of these costs individually. A Chapter 7 bankruptcy filed with a knowledgeable bankruptcy attorney is typically discharged in approximately 90 days, saving you time and stress from arguing over these debts later during your divorce filing, thus decreasing divorce costs.

If your spouse files bankruptcy during your divorce, then the divorce will be paused until the bankruptcy case closes. Thus, it is a better idea to agree with your spouse to file bankruptcy jointly before divorce. This avoids dragging out the already very stressful and emotional process of a divorce filing.

Plus, several studies show that the number one reason for divorce is financial trouble. It is possible that discharging you and your spouses’ debts through a Chapter 7 bankruptcy may incidentally save your marriage once your financial issues are resolved.

2. Which spouse is responsible for which debts?

Wisconsin is a community property state; therefore, all property acquired during a marriage is subject to equitable distribution after divorce. This means that all debt incurred during the marriage, regardless of which spouse incurred the debt, is to be paid back 50/50. This can lead to collection efforts, lawsuits, and a hindered credit score.

Divorcing spouses can agree to divide these debts between themselves, but the stress of negotiating these debts can be relieved by filing a Chapter 7 bankruptcy before divorce, as it eliminates determining who pays for what debts during the divorce.

In making the decision of whether to file bankruptcy or divorce first, there are some cautions to be aware of. The first issue is the potential of having an uncooperative spouse who does not want to file jointly. If this is the case, then you should file alone. However, within the divorce proceeding, be careful not to agree to any conditions of the divorce requiring you to pay part of any joint debt. A completed Chapter 7 bankruptcy will free you of those financial obligations.

A second caution to be aware of is how marital debt is treated in bankruptcy. The payment of marital debt, or in other words, any debt you agreed to pay your spouse during divorce, may not be discharged or eliminated in bankruptcy.

A Chapter 7 bankruptcy exemption allows you to protect the equity in your property from creditors. For instance, the Wisconsin Chapter 7 exemption allows you to protect up to $75,000.00 in equity in your home, meaning that creditors cannot take your property if the equity in your home is less than $75,000.00.

Filing jointly may increase your exemption amounts because the State of Wisconsin allows you to double your exemption amounts, essentially allowing you to protect more property from creditors.

1. A lawyer can help you qualify for Chapter 7 when you may have thought you did not qualify

2. An improper filing can result in lost assets or a dismissed case, wasting your time and money

3. An experienced attorney can help fill out the complex forms and paperwork

4. An attorney can be a buffer between contentious spouses, thus easing communication

Schedule a Free Bankruptcy & Debt Consultation with Wynn at Law, LLC

If you are considering bankruptcy and have questions, don’t hesitate to contact our bankruptcy attorney, Shannon Wynn. Wynn at Law, LLC offers free, in-depth bankruptcy consultations. Our bankruptcy attorneys are here to listen, advise, and help during your financial difficulties so you can move forward with your life.

You can reach our bankruptcy attorney by phone at 262-725-0175 or our website’s contact page. Wynn at Law, LLC has bankruptcy law offices conveniently located in Salem, Delavan, and Lake Geneva, Wisconsin.

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Wisconsin’s Small Estate Affidavit statute allows estates under $50,000 to avoid probate and instead be transferred via affidavit. See Wis Stat. §867.03. It can be used by an heir, a trustee of a revocable trust, a person named in the decedent’s will, or a guardian after the passing of the decedent.

Why use a transfer by affidavit

A transfer by affidavit avoids the costly and time-consuming probate process and thus allows the estate’s assets to pass more quickly.

What assets apply to a transfer by affidavit?

A transfer by affidavit applies to any probate assets cumulatively worth under $50,000. Probate assets are any assets that do not have a specifically designated beneficiary or payable on death (POD) designation. Jointly owned items, such as bank accounts or vehicles with two names on the title, are considered non-probate assets because it is presumed that the property will transfer to the other joint owner upon the death of the other owner. Some examples of probate assets that could be transferred by affidavit include property titled solely in the decedents name such a vehicle, small parcels of hunting or fishing land, or bank accounts with no POD.

What is the process for a transfer by affidavit?

To transfer assets under Wisconsin’s Small Estate Affidavit statute, the heir, trustee of a revocable trust, beneficiary of the decedent’s will, or a guardian of the decedent, must complete the Transfer by Affidavit form. This form includes the name of the decedent’s estate, the total fair market value of the assets, and a description of the assets being transferred. If real estate is being transferred, then you must also complete an Affidavit of Heirship and the Affidavit of Service. If these additional forms are required, then you must present copies of them to the decedent’s heirs at least 30 days before filing the forms. Lastly, you must get the forms notarized and filed with the court. The property can then be claimed within 30 days of presenting the notarized affidavit.

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