Jointly Held Assets
Posted: February 4, 2017
Property Law Systems
There are two different property law systems in the United States that govern property owned by married couples: a “community property” system and a “common law” system. Whether a married decedent was a resident of a community property or common law property state at the time of death affects the classification of the decedent’s property.
Community Property System
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Broadly speaking, married couples in community property states are deemed to own all their assets as “community property” regardless of how the property is titled.
Wisconsin has a unique community property system referred to as a “marital property” system (marital property is a form of community property). Wisconsin’s Marital Property Act, found in Chapter 766 of the Wisconsin Statutes (the “MPA”), was adopted in 1986.
Presumption of Marital Property
In Wisconsin, all property of spouses is presumed to be marital property, unless otherwise indicated. Upon the death of either spouse, marital property converts into tenancy-in-common property and the surviving spouse retains his or her undivided one−half interest in each item of marital property. Only the decedent’s interest in the property is subject to administration.
Optional: Survivorship Marital Property
When titling marital property, “[i]f the words “survivorship marital property" are used instead of the words “marital property"…the marital property so held is survivorship marital property. On the death of a spouse, the ownership rights of that spouse in the property vest solely in the surviving spouse by non-testamentary disposition at death. The first deceased spouse may not dispose at death of any interest in survivorship marital property.”
Married individuals in community property states may also own individual property, such as property that a) was acquired by a spouse prior to marriage, b) is acquired by gift or inheritance, or c) is classified as individual property by written agreement of both spouses. It is very important that individual property not be comingled with community property, or else it can be reclassified as community property.
If a decedent in a community property state owns property jointly with someone who is not his or her spouse, the property may be owned as joint tenants with right of survivorship, or as tenants-in-common, as described next.
Common Law Property System
Ownership of property by married persons in common law states (or “separate property” states) is generally determined by how the property is titled. Married persons in common law states may own property as Joint Tenants with Right of Survivorship (“JTWROS”), Tenants by the Entirety (TBE) or Tenants-in-Common (“TIC”).
Joint Tenancy with Right of Survivorship
JTWROS is a form of ownership by two or more persons in which each person owns the whole asset. Upon death, a decedent’s interest in JTWROS property passes to the other joint owner(s).
Tenants by the Entirety
TBE is a variation of JTWROS for married persons and is only available in select states. Each spouse has a right of survivorship over the property that neither party can terminate without consent from the other.
TIC is a form of ownership by two or more persons in which each person owns a fractional interest in an asset. Tenants-in-common may have unequal interests in an asset. At death, a decedent’s interest in TIC property becomes a part of the deceased owner’s estate and passes according to his or her estate plan. The recipient(s) of a decedent’s interest takes the property as tenants-in-common with the surviving owner(s).
TIC is a common form of ownership for property owned jointly by unmarried persons.
 §766.31(2). (All statutory references herein refer to the Statutes of the State of Wisconsin unless otherwise indicated.)
Schedule an appointment with us today.
Meet with a knowledgeable attorney who specializes in your area of law.
1251 W. Glen Oaks Lane, Mequon, WI 53092
F: (262) 238-6999