Wisconsin Marital Property and Your Estate Plan

Wisconsin is a marital property state, its version of community property. Since January 1, 1986, most property a couple acquires during marriage while both spouses are domiciled in Wisconsin belongs half to each spouse, whatever name is on the title, and the law presumes that all property of spouses is marital property. For estate planning, the largest consequence is federal: at the first death, both halves of marital property can receive a new income tax basis, which can erase capital gains tax on decades of appreciation.

What is Wisconsin's marital property law?

Wisconsin adopted its system through 1983 Wisconsin Act 186, which created what is now chapter 766 of the Wisconsin Statutes. The law first applies to a couple on their "determination date," defined as the last of three events: the marriage, 12:01 a.m. on the date both spouses are domiciled in Wisconsin, or 12:01 a.m. on January 1, 1986.

All property of spouses is presumed to be marital property, and each spouse has a present, undivided one-half interest in each item of marital property. At the first death, the survivor keeps their own half, which by statute is not subject to administration in the decedent's estate.

How is property classified: marital, individual, or mixed?

Property a spouse owned on the determination date is generally that spouse's individual property. After that date, the default is marital property, with defined exceptions, including property received by gift or inheritance from a third person, property exchanged for individual property, most personal injury recoveries, and property a decree or agreement designates as individual. Income is marital property even when it comes from individual property, so dividends on an inheritance are marital by default.

Mixing marital property with other property reclassifies the other property as marital unless the non-marital component can be traced. A marital component also arises when a spouse applies substantial labor to individual property without reasonable compensation and substantial appreciation results, as with a premarital business grown by an owner who paid themselves little.

How does titling work, and what is survivorship marital property?

Title in Wisconsin mostly determines who may manage an asset, not who owns it. The title form that matters most for estate planning is survivorship marital property. With it, the deceased spouse's ownership rights vest solely in the survivor at death, outside probate, and the first spouse to die cannot leave any interest in it by will. A joint tenancy titled exclusively between spouses after their determination date is treated by statute as survivorship marital property.

Our view: survivorship marital property is worth discussing with your attorney when a couple will leave everything to each other and wants probate avoidance without a revocable trust. It is usually the wrong title when the plan depends on the first spouse's share passing into a trust or when either spouse has children from a prior relationship, because the survivor takes outright. Titling and probate generally are covered in how wealth actually transfers at death.

Why can the basis adjustment matter more than estate tax planning?

Under Section 1014(b)(6) of the Internal Revenue Code, the surviving spouse's half of community property receives a new basis equal to fair market value at the first death, provided at least half of the community interest is includible in the decedent's gross estate. The decedent's half is adjusted under the general rule. The IRS lists Wisconsin among the nine community property states in Publication 555, and Wisconsin Tax Bulletin 60, a Department of Revenue bulletin issued after Revenue Ruling 87-13, states that marital property, including survivorship marital property, qualifies for the adjustment on both halves.

In common-law states, spouses holding property as joint tenants include only one-half in the first decedent's estate, so only that half is adjusted. (Property held solely by the first spouse to die is fully adjusted in any state; the marital property advantage is that both halves adjust whoever dies first.)

The federal estate and gift exemption is $15 million per person for 2026, or $30 million for a married couple, and Wisconsin imposes no estate tax for deaths after 2007. Below those levels, a lifetime gift or a grantor retained annuity trust saves no estate tax and carries the donor's old basis to the recipient, while the full basis adjustment saves income tax. Protecting marital property classification on appreciated assets is then often worth more than any estate tax technique; our $15 million exemption article covers the transfer tax side.

The adjustment cuts both ways: an asset worth less than its cost loses the loss on both halves. Retirement accounts and other income in respect of a decedent receive no basis adjustment.

A worked example: one step-up or two

This example is hypothetical. A Madison couple married here in 1995 and has a net worth of about $9 million. They own a brokerage account worth $4,000,000 with a $1,000,000 basis and a lake property worth $1,000,000 with a $300,000 basis, both marital property acquired during the marriage. One spouse dies, and the survivor sells both assets at date-of-death values. Because both halves are marital property, the survivor's basis becomes $5,000,000 and the sale produces no gain.

For comparison, suppose only the decedent's half were adjusted, as happens with spousal joint tenancy in a common-law state or a Wisconsin joint tenancy created before the couple's determination date: $2,500,000 of stepped-up value plus $650,000 of original basis, a total of $3,150,000, leaving a gain of $1,850,000. At the top federal rate of 20 percent plus the 3.8 percent net investment income tax, and Wisconsin's 7.65 percent top rate on the 70 percent of gain left after its 30 percent deduction, federal tax would be about $440,000 and Wisconsin tax about $99,000, roughly $539,000 in all.

Had they instead given the brokerage account to an irrevocable trust during life, the trust would keep the $1,000,000 basis and a sale would generate about $875,000 of combined tax. The example applies top rates to the whole gain and assumes unchanged values.

What do unilateral statements and marital property agreements do?

A unilateral statement lets one spouse, acting alone, classify future income from their non-marital property as individual property. It must be signed and notarized, the signing spouse must deliver a copy to the other spouse within five days, and it can be revoked in writing.

A marital property agreement is broader: a writing signed by both spouses, before or during marriage, enforceable without consideration. It can reclassify property, set disposition at divorce or death, and pass property at death without probate. It can be set aside if it was unconscionable when made, signed involuntarily, or in defined circumstances made without fair and reasonable financial disclosure.

Our view: an agreement is worth discussing with an attorney in a second marriage or blended family; when a spouse holds significant inheritances or a premarital business; and when a couple has moved here from a common-law state and is considering reclassifying appreciated property for the basis adjustment. Reclassifying individual property as marital gives the other spouse a present one-half interest in it, and a written agreement on property division generally binds a divorce court unless inequitable, so each spouse should have counsel.

What happens if you move to Wisconsin from a common-law state?

Property acquired during marriage before both spouses became Wisconsin domiciliaries predates the determination date. If it would have been marital property under chapter 766, it is deferred marital property.

If the decedent was domiciled in Wisconsin, the surviving spouse may make a deferred marital property election for no more than 50 percent of the augmented deferred marital property estate, a pool that includes both spouses' deferred marital property and certain transfers by the decedent. Because the survivor's own deferred marital property counts in the pool, the election mainly helps a survivor holding less of it. The survivor generally must petition the probate court within six months after the death, so counsel should be involved early.

Deferred marital property misses the double adjustment: Wisconsin Tax Bulletin 60 states that it is adjusted only for the portion included in the decedent's estate, while property reclassified as marital by agreement is treated as marital property (Revenue Ruling 87-98). Timing matters: under Section 1014(e), appreciated property a decedent received by gift within one year of death that passes back to the donor or the donor's spouse keeps its old basis. The bulletin applies this to a death within a year of a reclassifying agreement: no adjustment on the decedent's half and, in the Department's view, none on the survivor's.

What happens if you move out of Wisconsin?

Leaving Wisconsin does not by itself undo property rights acquired under chapter 766, but how a new state treats that property depends on its law, so relocating couples should document what was acquired here; our article on leaving Wisconsin and changing domicile covers the residency side.

How are retirement accounts and life insurance treated?

Chapter 766 classifies deferred employment benefits, including 401(k)s and pensions, as marital property to the extent attributable to employment after the determination date, and as mixed property when employment spans that date. If the non-employee spouse dies first, Wisconsin law generally provides that their marital property interest in the employee spouse's plan, and in an IRA traceable to a rollover from it, terminates.

Federal law agrees: in Boggs v. Boggs (1997), the Supreme Court held that ERISA preempted a Louisiana community property rule letting a predeceasing spouse leave an interest in pension benefits to heirs. ERISA also generally requires a 401(k) balance to pass to the surviving spouse unless the spouse consents in writing to another beneficiary.

Life insurance has its own rule. A policy issued after the determination date that names the insured spouse as owner is marital property regardless of which funds pay the premiums, as long as both spouses remain Wisconsin domiciliaries; a later move makes it mixed property. Because each spouse then owns half, a transfer to an irrevocable life insurance trust is a gift of marital property; one spouse alone generally may give no more than $1,000 a year, valuing a policy at its death benefit, and the other spouse can sue to recover an excess, so both typically sign. If the non-insured spouse dies first, Wisconsin law generally limits their interest to one-half of the policy's marital property cash value (its interpolated terminal reserve) and unused premium, so the policy itself stays with the insured.

Who inherits if a married Wisconsin resident dies without a will?

Under section 852.01, if the decedent leaves no surviving descendants, or if all surviving descendants are also descendants of the surviving spouse, the surviving spouse takes the entire intestate estate. Parents and siblings take nothing.

If the decedent has a descendant who is not also the surviving spouse's descendant, the spouse takes half of the decedent's property other than marital property and interests the spouses held equally as tenants in common, and all of the decedent's descendants share the rest, including the decedent's half of the marital property. A surviving spouse in a blended family can end up co-owning the home with stepchildren.

How does marital property interact with creditors and divorce?

An obligation a spouse incurs during marriage is presumed to be in the interest of the marriage or family, and such an obligation may be satisfied from all marital property and all other property of the incurring spouse. A tort judgment against one spouse is narrower: it can reach that spouse's non-marital property and that spouse's interest in marital property.

Divorce uses a different test. Wisconsin's divorce statute presumes equal division of all property except property received by gift or inheritance from someone other than the other spouse, absent hardship. The two tests do not match: property owned before the marriage is individual under chapter 766 but presumptively divisible in divorce. We cover the planning side in financial planning through divorce.

What should a Wisconsin estate plan review check?

Specifics depend on each family's facts and should be confirmed with your attorney or CPA, but a review should cover:

• The determination date and each significant asset's classification, with tracing records for inheritances, gifts, premarital and pre-move property.
• Title forms on the home and joint accounts, including any pre-determination-date joint tenancy.
• Whether survivorship titles, marital property agreements or unilateral statements conflict with the estate plan.
• Retirement plan and life insurance beneficiary designations, and who owns each policy.
• Low-basis assets to hold rather than gift so they receive the adjustment at death.

These items supplement the general estate planning checklist.

Key numbers

Frequently asked questions

Is Wisconsin a community property state?Yes, for federal tax purposes. Wisconsin calls its system marital property, and the IRS lists it among the nine community property states.

Does the name on the title determine who owns marital property?No. Title generally determines which spouse may manage an asset; an account in one spouse's name can be entirely marital property.

Do inheritances become marital property?An inheritance from a third person is individual property, and so is its appreciation, unless a spouse's uncompensated work on it created the growth. Its income is marital property unless a unilateral statement or agreement provides otherwise, and mixing it with marital funds can reclassify it if it cannot be traced.

We moved here from Illinois. Is our property marital property?Property acquired during the marriage before you both lived here, other than gifts and inheritances, is generally deferred marital property, which does not receive the double basis adjustment. A marital property agreement can reclassify it, subject to timing and trade-offs worth reviewing with counsel.

Sources

• 1983 Wisconsin Act 186, Wisconsin State Legislature, April 1984
• Wisconsin Statutes Chapter 766: Property Rights of Married Persons; Marital Property, Wisconsin State Legislature
• Wis. Stat. § 766.53: Gifts of marital property to 3rd persons, Wisconsin State Legislature
• Wis. Stat. § 766.55: Obligations of spouses, Wisconsin State Legislature
• Wis. Stat. § 766.58: Marital property agreements, Wisconsin State Legislature
• Wis. Stat. § 766.59: Unilateral statement; income from nonmarital property, Wisconsin State Legislature
• Wis. Stat. § 766.60: Optional forms of holding property; survivorship ownership, Wisconsin State Legislature
• Wis. Stat. § 766.61: Classification of life insurance policies and proceeds, Wisconsin State Legislature
• Wis. Stat. § 766.70: Remedies, Wisconsin State Legislature
• Wis. Stat. § 851.055: Deferred marital property, Wisconsin State Legislature
• Wis. Stat. § 852.01: Basic rules for intestate succession, Wisconsin State Legislature
• Wis. Stat. § 861.02: Deferred marital property election, Wisconsin State Legislature
• Wis. Stat. § 861.08: Time and manner of making the deferred marital property election, Wisconsin State Legislature
• Wis. Stat. § 767.61: Division of property, Wisconsin State Legislature
• 26 U.S. Code § 1014: Basis of property acquired from a decedent, Legal Information Institute, Cornell Law School
• 26 U.S. Code § 1015: Basis of property acquired by gifts and transfers in trust, Legal Information Institute, Cornell Law School
• 26 U.S. Code § 2040: Joint interests, Legal Information Institute, Cornell Law School
• 29 U.S. Code § 1055: Requirement of joint and survivor annuity and preretirement survivor annuity, Legal Information Institute, Cornell Law School
• Boggs v. Boggs, 520 U.S. 833 (1997), Legal Information Institute, Cornell Law School, June 1997
• Publication 555: Community Property, Internal Revenue Service, December 2024
• What's new: Estate and gift tax, Internal Revenue Service, July 2026
• Net Investment Income Tax, Internal Revenue Service
• Wisconsin Tax Bulletin 60: Basis Adjustment Under Wisconsin's Marital Property Law, Wisconsin Department of Revenue
• Estate Tax: Frequently Asked Questions, Wisconsin Department of Revenue
• Publication 103: Reporting Capital Gains and Losses for Wisconsin, Wisconsin Department of Revenue, January 2026
• Wisconsin Tax Update: Fall 2025, Wisconsin Department of Revenue, November 2025