Dec. 5, 2013 – Gregory Felhofer and his girlfriend purchased a vacant lot to build a home. By the time they built it and moved in, they were married. Recently, a state appeals court rejected a claim that the property was not survivorship marital property.
After Felhofer died intestate, his children from a previous marriage claimed that their father’s home was improperly omitted as an inventory asset for probate administration.
They said the property should be included because it did not automatically pass to his surviving spouse, Mary Felhofer, since the property was purchased before the marriage.
And since the property was not retitled after the marriage, they said, their father and Mary held the property as tenants in common, and Gregory’s interest should go them.
Mary argued that she and Gregory acquired the property as a homestead after the marriage, so the property was survivorship marital property under Wis. Stat. section 766.605. That provision states that a “homestead” is survivorship marital property if the homestead was “acquired” after the marriage and held exclusively between spouses.
A circuit court ruled for Mary and against the children, and in Alexander v. Estate of Felhofer, 2013AP147 (Dec. 3, 2013), the District I Court of Appeals affirmed.
A three-judge panel specifically reviewed when Mary and Gregory “acquired” a “homestead,” as those terms are used in section 766.05. The children argued that the homestead was acquired before the marriage, vesting no survivorship rights.
The vacant lot was purchased before the couple was married, but the property was not a homestead at that time because a homestead “must include a dwelling for use as a home,” the appeals court explained. Thus, the property became a homestead after the couple legally occupied the home. By that time, Mary and Gregory were married.
The appeals court rejected the children’s claim that a vacant lot can be a homestead if the purchasers intend to build a home on the land. The children relied on a case from 1884 to make that argument, but the three-judge appeals panel was not persuaded.
In Scofield v. Hopkins, 61 Wis. 370, 21 N.W. 259 (1884), the Wisconsin Supreme Court ruled that a debtor’s land was protected as a “homestead” from a judgment creditor, even though the debtor was still in the process of building a home on the land.
“[W]e are not persuaded that Scofield applies to construction of this statute, or these facts, namely, survivorship rights of a spouse as opposed to judgment-creditor rights,” wrote Judge Kitty Brennan, noting that § 766.605 was enacted 100 years after Scofield.
The appeals court also ruled that Gregory and Mary “acquired” the homestead after they were married, because the property was not a homestead until they moved in.
“Their status as single persons at the time the warranty deed was signed, and when the vacant lot was acquired, is irrelevant to the § 766.605 analysis,” Judge Brennan wrote.
The court also rejected the children’s argument that the warranty land deed classified the property as a tenancy in common by referencing the couple as “single persons” and a tenancy in common is the ownership default absent express language to the contrary.
“Because the deed does not express an intent contrary to that set forth in Wis. Stat. § 766.605, we must conclude, pursuant to the statute’s plain language, that Felhofer and the Decedent owned the Property as survivorship marital property,” Brennan wrote.
Contrary to the children’s argument that the lower court ruling deprived their father of a right to pass property to his heirs, the appeals court explained that their father could have expressed a desire to do so in a marital property agreement, but he didn’t.
