Once a divorce is filed, Wisconsin law prevents a spouse from “encumbering, concealing, damaging, destroying, transferring, or disposing of property” without consent or court order. Not only does this rule prevent a spouse from selling property, it also prohibits cashing in retirement accounts, stocks, etc., or withdrawing substantial amounts from investment accounts, checking accounts, CDs, etc. But notice the extent of the language in the statute—it does more than prevent sale of assets. It also prevents “encumbering” assets, meaning that a spouse is generally prohibited from obtaining certain types of loans (for example, a line of credit using the home as collateral). Assets cannot be “concealed” or “transferred,” meaning that they cannot be given to others to hold or hide, given away, or generally exchanged for other assets. Likewise, a spouse cannot damage or destroy an asset. While it may be generally hard to imagine why a spouse would purposely destroy an asset, it is more common than might be thought. In May 2012, in Superior, Wisconsin, an upset spouse damaged and spray painted vulgar words on the other’s vehicle. The basic concept behind this law is to maintain the couple’s property as close to what it was on the date the divorce was filed. It prevents both spouses from damaging the other’s interests out of spite or anger, and allows the court to allocate the assets.
Once a divorce is started, the wisest course is to consider all assets frozen. However, there are some exceptions that allow spouses to use assets or income during divorce. The first (and most clear) is to obtain a court order granting each spouse temporary rights to income and assets, pending the final divorce judgment. Second, spouses can use their income “in the usual course of business” to pay for “necessities.” This is usually understood to mean that each spouse is permitted to pay reasonable living expenses, bills, etc. without first seeking approval from the other spouse or the court. Questions can arise as to what is a “necessity,” which is probably different for every family, but in general, this provision is viewed as common sense and is not often controversial. Third, spouses can use assets to pay “reasonable” attorneys’ fees. The rule recognizes that each spouse needs access to funds to pay their attorneys, but neither spouse should take advantage of this rule to pay a high attorney bill by liquidating substantial assets. Usually, both spouses are simply granted an equal amount for their lawyer fees.
A separate rule also allows a spouse, in some circumstances, to reach back up to one year prior to the divorce filing to “return” a sold or liquidated asset to the marital estate. Even though the asset is gone, the court has the authority to “credit” it to the spouse who sold it, reasoning that spouse deprived the other of the asset. It can sometimes be difficult to determine if an asset was sold, given away, etc., since many spouses do not have a complete grasp of all the family assets. However, if a spouse has a suspicion this behavior occurred for a substantially valuable item or cash, it may be worth the effort. Tracing these transactions can be time consuming and difficult, but I have done it successfully before. I am happy to consult on any questions on this topic.