Estate of Kobylski, In re
| Decision Date | 30 June 1993 |
| Docket Number | No. 92-2332,92-2332 |
| Citation | 503 N.W.2d 369,178 Wis.2d 158 |
| Parties | In re the ESTATE OF Genevieve KOBYLSKI, a/k/a Genevieve Hellstern. ESTATE OF Genevieve KOBYLSKI, a/k/a Genevieve Hellstern, Appellant, v. Geza HELLSTERN, Respondent. |
| Court | Wisconsin Court of Appeals |
Before NETTESHEIM, P.J., and ANDERSON and SNYDER, JJ.
The principal issues on this appeal concern the "mixed property" provisions of sec. 766.63, Stats., of Wisconsin's Marital Property Act (MPA). Genevieve Hellstern's estate appeals from a judgment in favor of Genevieve's surviving husband, Geza Hellstern. The estate challenges the probate court's determination that a residence, titled in Genevieve's name and brought to the marriage by her, was reclassified to marital property pursuant to sec. 766.63 of the MPA. The estate also challenges the probate court's determination that Geza is not liable for the unpaid property taxes on the residence or for Genevieve's loan to him during the marriage for an automobile.
We reverse the probate court's ruling that the residence was reclassified to marital property and we remand for further proceedings on this issue. We also reverse and remand the court's ruling that Geza is not liable to the estate for the unpaid property taxes. We affirm the court's ruling that Geza is not liable to the estate for the automobile loan.
Genevieve, age 58, and Geza, age 71, married on February 20, 1982. At that time, both were widowed and had children from their prior marriages. Their marriage produced no children.
At the time of the marriage, Genevieve owned a residence where she and her first husband had lived and raised their children. Genevieve and Geza lived in this residence for the duration of their marriage. Genevieve retained title to the property in her own name. During the marriage, Genevieve and Geza made several improvements to the residence that were paid for by funds from their joint checking and savings accounts. They also used these accounts to pay for property taxes, utilities, insurance and other household expenses. Additionally, Geza painted the interior and exterior of the residence, assisted Genevieve's son in enlarging the one-car garage, and did the yard work.
In addition to the residence, Genevieve brought to the marriage three certificates of deposit (CD's) valued at $10,000 each. Genevieve cashed one of the CD's during the marriage and later deposited the funds into a joint NOW account; the additional two CD's remained titled solely in Genevieve's name. In 1988, the spouses used $9000 from the joint NOW account for the purchase of a 1987 Cadillac automobile that was titled in both of their names.
In June 1979, three years before Genevieve and Geza married, Genevieve executed her will which distributed her entire estate to her four children from her prior marriage. Following Genevieve's death in June 1990, Geza filed notice to take under the widower's election of deferred and augmented marital property. See secs. 861.02 and 861.03, Stats. Geza sought either:
(1) reimbursement for the funds expended on the residence for improvements if the probate court ruled that the residence was Genevieve's nonmarital property, or (2) the value of his one-half marital interest in the residence if the court ruled that the residence was reclassified to marital property because he and Genevieve had contributed marital funds for improvements and because he also had applied uncompensated labor to improve the residence. The estate objected to Geza's claims.
The estate also filed claims against Geza for: (1) the unpaid property taxes on the residence which accrued after Genevieve's death while Geza was residing in the residence, and (2) the funds expended by Genevieve and Geza to purchase the Cadillac.
The probate court ruled in Geza's favor on all issues. The court held that the residence was mixed property under sec. 766.63, Stats., of the MPA because "substantive labor, efforts and marital cash were applied" during the marriage. The court further ruled that the residence was reclassified to marital property because "tracing is [not] possible." The court therefore awarded Geza the value of a one-half interest in the residence. Based on this conclusion, the court also denied the estate's claim against Geza for the residence's unpaid property taxes. Finally, the court denied the estate's claim for the $9000 allegedly loaned to Geza to purchase the 1987 Cadillac because the funds were drawn from a joint account and the vehicle was titled in both Genevieve's and Geza's names.
The estate appeals. Further facts will be provided as they become relevant to our discussion.
The estate argues that the probate court erred in its construction of the mixed property provisions, sec. 766.63, Stats., of the MPA. While the estate does not appear to challenge the court's determination that Genevieve and Geza mixed their marital and nonmarital property, the estate does dispute the court's further determination that tracing could not be performed and that, as a result, total reclassification of the asset occurred.
A trial court's tracing determination is a finding of fact that will be upheld unless clearly erroneous. In re Lloyd, 170 Wis.2d 240, 251, 487 N.W.2d 647, 651 (Ct.App.1992). However, whether the correctly found facts establish the property as marital or nonmarital is a question of law we review independently. Id. at 252, 487 N.W.2d at 651. Similarly, our application of ch. 766, Stats., to the facts also presents a question of law and we need not defer to the trial court's conclusion. Id.
All property of married persons either is, or is presumed to be, marital property unless it is proven to be otherwise. Section 766.31(1) and (2), Stats. Likewise, any property determined not to be marital property is presumed to be deferred marital property and may be subject to a surviving spouse's elective rights under sec. 861.02, Stats. See sec. 858.01(2) Stats.; 1 K. CHRISTIANSEN, F. WM. HABERMAN, J. HAYDON, D. KINNAMON, M. MCGARITY & M. WILCOX, MARITAL PROPERTY LAW IN WISCONSIN § 2.72b, at 2-116 (2d ed. 1986) [hereinafter MARITAL PROPERTY LAW IN WISCONSIN]. At death, the deceased spouse may freely dispose of only the one-half interest the decedent owns in each item of marital property. The decedent may also dispose of the whole of each item of his or her nonmarital property. Sections 766.31(3) and 861.01, Stats.; Lloyd, 170 Wis.2d at 252, 487 N.W.2d at 651.
Despite the MPA's presumption that all spousal property is marital, spouses are permitted to own individual and predetermination date property. See secs. 766.31(6) & (8), Stats. See also 1 MARITAL PROPERTY LAW IN WISCONSIN § 3.1, at 3-2 to 3-3. Predetermination date property is not individual property, or a type of individual property, nor does it imply a classification all its own. 1 Lloyd, 170 Wis.2d at 253, 487 N.W.2d at 652. However, during marriage, predetermination date property is treated as if it were individual property, and at death it may be subject to a deferred marital property analysis if the marital property presumption is overcome. 2 Id. at 253-54, 487 N.W.2d at 652.
The party challenging the marital property (or deferred marital property) presumption has the burden to establish that the property at issue is not marital. Id. at 254, 487 N.W.2d at 652. Demonstrating that the time, method or source of the property's acquisition establishes the property as nonmarital rebuts the presumption as to that item of property. Id.
The probate court concluded that Genevieve's nonmarital residence was reclassified to marital property under sec. 766.63(1) and (2), Stats., because "substantive labor, efforts and marital cash were applied" during the marriage and "tracing is [not] possible ... as unreimbursed labor is involved." We construe the court's ruling as resting upon two independent determinations under sec. 766.63:
(1) Genevieve and Geza's use of their marital funds for improvements to the residence constituted a mixing of marital and nonmarital property which reclassified the residence to marital property pursuant to sec. 766.63(1) because its nonmarital component could not be traced, and (2) the application of Geza's substantial uncompensated labor to the residence served to reclassify the residence under sec. 766.63(2) because the value of the labor could not be traced. We address each of these determinations in turn.
The probate court made the following factual findings, none of which is disputed on appeal. Genevieve owned the residence when she and Geza married, and she retained title in her sole name during her life. During the marriage, Geza received a pension and social security, while Genevieve received social security and the interest from her CD's. Generally, all of Genevieve's and Geza's funds were deposited into and transferred between their joint savings and checking accounts to pay for property taxes, utilities, insurance and other related residence expenses. After their determination date, 3 the spouses paid $3970.08 from their joint checking account for improvements to the residence.
From these facts the probate court concluded that Geza and Genevieve's contribution of their marital funds to pay for the improvements constituted "mixing marital property with property other than marital property." See sec. 766.63(1), Stats. The court also concluded that tracing was not possible and therefore ruled that Genevieve's separately titled residence was reclassified to marital property. 4 See id.
Ordinarily, we would begin any classification discussion under the MPA with the statutory...
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