Starting a Business: Answering Your Legal Questions

How should I organize my business?

Choosing the form of legal organization for your business is similar to buying a new car. You have to know what models are available and which features and options you desire. There are four basic "models" or types of business organizations: sole proprietorships, partnerships, limited liability companies, and corporations. The key features a business owner should consider are liability protection and desired tax treatment. Some business organizations offer liability protection for the owners. Others do not. Some business organizations are taxed as a separate entity. Others are merely conduits and all of the income and expenses flow through to the owners.

A lawyer can help you determine which type of business organization is best for your business, and can help draft important agreements — such as shareholder, partnership, and operating agreements — that will help you manage you business.

SOLE PROPRIETORSHIP

What is a sole proprietorship?

It is a business with one owner who makes the management decisions. The owner and the business are one and the same, with a common identity. Sole proprietorship is the simplest business organization.

How is a sole proprietorship formed and operated?

There are almost no legal formalities to forming a sole proprietorship. If the proprietor has employees, the main step is obtaining a federal employer identification number (EIN) from the IRS by filing a Federal Form SS-4. If the proprietorship has no employees, the owner can use his or her Social Security number as the business identification number. However, the IRS still prefers that the proprietorship obtain an EIN.

How is a sole proprietorship taxed?

Even if a sole proprietor obtains an EIN for business, the proprietorship is not a separate taxpayer. All of the income and expenses of the proprietorship are reported on Schedule C of the owner's individual federal income tax return and on Form 1 with the state. Although the owner of a sole proprietorship is not an employee, he or she is required to pay self employment tax and to make periodic estimated tax payments on income from the sole proprietorship. The sale of goods or services may be subject to sales tax, which must be paid to the state. If the proprietorship has employees in addition to the owner, the proprietorship must pay federal employment tax (FUTA), the employer's share of Social Security, and the employer's share of Medicaid. The proprietor also must withhold income taxes, the employee's share of Social Security, and Medicaid from the employee's income. The amounts withheld must be deposited with the government.

Is a sole proprietor protected from liabilities of the business?

Since a sole proprietorship is the owner's alter ego and not a separate legal entity, there is no liability protection for the owner. The owner is responsible for all of the business's debts and obligations.

 

 

PARTNERSHIP

What is a partnership?

A partnership is simply an association of two or more persons, as co-owners, who carry on a business for profit.

How is a partnership formed and operated?

There are three types of partnerships: a general partnership, a limited partnership, and a limited liability partnership.

In a general partnership, each partner has an equal voice in managing the business of a partnership. Each general partner can bind the partnership and the other partners. While a written agreement is not required, a written partnership agreement is a good idea, because it can specify the partners' rights and duties. The partnership agreement does not need to be filed or recorded.

There are two types of partners in the limited partnership: general partners and limited partners. General partners manage the business and have authority to bind a partnership. Limited partners are in the nature of investors. They have very limited ability to manage partnership affairs. To form a limited partnership, a written document, called a Certificate of Limited Partnership, must be filed with and a fee paid to the Department of Financial Institutions (DFI).

A limited liability partnership is a form of a general partnership, with some modifications. A registration statement must be filed with the DFI and fees paid to register a general partnership as a limited liability partnership.

How is a partnership taxed?

A partnership must obtain an EIN. The partnership itself is merely a conduit for income tax purposes. Although a partnership has to file its own federal income tax return (Form 1065 and Schedule K-1), the business itself is not taxed. The partnership also must file Form 3 with the state. Instead the net income or loss flows through to the partners, generally in proportion to their percentage of ownership. Each partner reports his or her share of partnership income or loss on Schedule E of his or her Form 1040. Partners are taxed on their share of partnership taxable income or loss, which do not necessarily coincide with the amounts distributed to them by the partnership. Income to partners that is not in the nature of wages is not subject to self employment taxes. However, distributions that are for services rendered are subject to self employment taxes. If the partnership has employees, the partnership must withhold income taxes, Social Security, and Medicaid from its employees' wages. It must pay FUTA, Social Security, and Medicaid. A partnership also may have to pay sales and use taxes.

Is a partner protected from liabilities of the business?

A general partner is not protected and is liable for all the partnership's debts and obligations. In a general partnership, each partner can bind the partnership and incur liabilities for which each partner will be responsible. In a limited liability partnership, each partner is a general partner but does not have liability for the actions of other partners. In a limited partnership, the general partner is responsible for all of the business's debts and obligations. The limited partners' liability is limited to the amount that they invested in the business.

 

 

CORPORATIONS

What is a corporation?

A corporation is a legal entity that is separate from its owners. It receives its legal existence from a charter granted by the state.

How is a corporation formed and operated?

Anyone who wishes to form a corporation must prepare and file articles of incorporation with the DFI.

Once the corporation is formed, owners of the corporation, called stockholders, contribute money, property, or services to the corporation and in return they receive stock representing their ownership in the corporation. The stockholders elect a board of directors who are responsible for managing the corporation's affairs. The board of directors elects the corporation's officers who run the corporation's daily operations. The stockholders, directors, and officers may be, but do not have to be, the same people.

Since the corporation is an entity separate from its stockholders, directors, and officers, the corporation must observe certain formalities that are not required by a sole proprietorship or partnership.

How is a corporation taxed?

For tax purposes, there are two types of corporations: subchapter C (a regular corporation) and subchapter S corporations. C corporations are separate tax payers. A C corporation pay taxes on its own income; the shareholders are not taxed on corporate income. The corporation files a Form 1120 with the federal government and a Form 5 (where the entire business income is attributable to Wisconsin) with the state. If income is distributed to shareholders in the form of dividends, the corporation does not receive a deduction for the dividend distribution, but the shareholders must pay tax on the income. This is referred to as double taxation.

A subchapter S corporation is generally not taxed. It is merely a conduit for tax purposes. All the income and losses flow through to the shareholders in proportion to their shareholding. As in a partnership, distributions do not determine the amount taxable to the shareholders. A subchapter S corporation, which may have no more than 100 shareholders, files Form 1120S with the federal government and Form 5S with the state. Both regular C corporations and subchapter S corporations must pay FUTA and the employer's share of Social Security and Medicaid tax. The officers may, but are not required to be, employees of the corporation. The corporation must withhold an employee's share of Medicaid and Social Security and withholding taxes and remit the withheld tax to the government.

Is a corporation owner protected from liabilities of the business?

The stockholders, officers, and directors are not personally liable for the corporation's debts and obligations. However, stockholders often are required to personally guarantee bank loans and other obligations of the corporation. Also, if the corporation fails to deposit withholding taxes, officers and directors may be individually liable for the withholding tax. If a corporation violates environmental laws, the individual owners may have personal liability for the violation.

 

 

LIMITED LIABILITY COMPANIES

What is a limited liability company?

A limited liability company (LLC), like a corporation, is a distinct legal entity.

How is an LLC formed and operated?

Although it is not a corporation, an LLC provides its owners with the same liability protection of a corporation. An LLC receives its existence by filing Articles of Organization with the DFI. The owners, called members, receive "interests" or "units" in the LLC in exchange for property, money, or services. Members usually enter into an Operating Agreement that defines the obligations and duties of the members and managers. The LLC's business may be run by "managers," who may or may not be members. If an LLC is managed by all of its members, the members have the same broad authority as a general partner in a general partnership. If the LLC is managed by one or more managers, their authority resembles that of a general partner of a limited partnership. The other LLC members are merely investors in the company.

How is an LLC taxed?

An LLC can elect to be taxed as a corporation, but most LLCs do not make that election. Normally, an LLC is treated for tax purposes either as a sole proprietorship (if only one owner) or as a partnership (if two or more owners). If it is taxed as a sole proprietorship or partnership,the income and losses flow through to the LLC members. If it is taxed as a corporation, the entity itself pays the tax. If the LLC has more than one member it must apply for an EIN, and distributions to its members may be partnership distributions and not subject to employment taxes. The LLC may, but is not required, to have employees. If it has employees, it is subject to the withholding rules discussed above. If the LLC is taxed as a partnership, it files Form 1065 with the federal government and Form 3 with the state. If it is to be taxed as a corporation, it files Form 1120 with the federal government and Form 5 (where the entire business income is attributable to Wisconsin) with the state.

Is an LLC owner protected from liabilities of the business?

LLC members and managers enjoy limited liability. They are not liable for the debts and obligations of the business, unless they guarantee the obligations or fail to pay withholding taxes as discussed above. If an LLC violates environmental laws, the individual owners may have personal liability for the violation.

Where can I get more help?

There are a variety of state and federal agencies that can help you over the hurdles of starting a new business.

The Wisconsin Department of Commerce maintains information and offers free consulting services. Write to: 201 W. Washington Ave., P.O. Box 7970, Madison, WI 53707; or call (608) 266-1018 or (800) 435-7287. www.commerce.state.wi.us

The Wisconsin Job Service provides a variety of free services to employers. Write to: Job Service Division, 1819 Aberg Ave., Madison, WI 53704; or call (608) 242-7400. www.danejobs.com

The federal Small Business Administration can provide financial and other assistance. Contact the SBA at: 740 Regent St., Suite 100, Madison, WI 53715, (608) 441-5263; or 310 W. Wisconsin Ave., Room 400, Milwaukee, WI 53203, (414) 297-3941, www.sba.gov. The Milwaukee SBA also sponsors the Service Corps of Retired Executives (SCORE), (414) 297-3942.

The Wisconsin Small Business Development Center provides noncredit management courses for small business owners, managers, and entrepreneurs. SBDC counselors offer free one-on-one advice for those businesses in need of specific management assistance. The center also conducts research, distributes information, and works with other state agencies offering specialized assistance. The SBDC state office is at 432 N. Lake St., Madison, WI 53706-1498. Call (608) 263-7794 to find the SBDC office in your area. www.wisconsinsbdc.org

If you plan to incorporate your business and need information about Wisconsin laws, contact the Wisconsin Department of Financial Institutions, Division of Corporate Consumer Services (CCS), P.O. Box 7846, Madison, WI 53707, or call (608) 261-7577. www.wdfi.org

The IRS can provide several useful, free publications to help you comply with federal tax laws and acquire a federal employer ID number. Contact the IRS, 2135 Rimrock Rd., Madison, WI 53713, or call (608) 266-2772 or (800) 829-1040. The Wisconsin Department of Revenue also can provide free publications and help you comply with state tax laws and acquire any necessary tax permits and identification numbers. Contact the DOR at 2135 Rimrock Rd., Madison, WI 53713., P.O. Box 8901, Madison, WI 53708, or call (608) 266-2776.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

4/10. © State Bar of Wisconsin

 

 

Personal Injury: Answering Your Legal Questions

I've been injured, now what?

If someone else is more at fault for your injury than you are, you may make a claim against that person or business and their insurance company, if any. The type of accident and the cause of the accident may affect whether you are entitled to compensation, as in the following examples:

  • Motor vehicle accidents: Fault or "negligence" is determined by traffic regulations and which driver's carelessness contributed most to the accident and injuries, including your own conduct such as failure to use seatbelts.
  • Commercial accidents (such as in stores): Injuries are compensable only if caused by an unsafe condition that the owner should have known of, appreciated, and corrected before the accident.
  • Home/farm/apartment/recreation injuries: Renters, owners, or residents may be found liable for injuries they cause by negligent maintenance, oversight, or attacks by pets; however, property owners who permit others to use their land without charge for recreational purposes may be completely immune to any claim for unsafe conditions, however flagrant.
  • Government employees and premises: Injuries caused by negligent public employees or unsafe conditions will be compensated only in limited circumstances and are subject to stringent notice and claim requirements. State, federal, and local governments are given broad latitude to determine most matters involving public safety, including the design and maintenance of roads, parks, and facilities.
  • Workplace injuries: Injuries at work generally are covered by worker's compensation benefits which compensate for medical expenses, lost wages, and permanent impairments, without regard to fault by anyone. If the accident was caused by someone other than the employer or a co-worker, a fault-based claim can be made that could include damages for pain and suffering in addition to the worker's compensation benefits.
  • Intentional injuries: Injuries inflicted on purpose by any means are not usually covered by the guilty party's liability insurance, although the responsible party may be personally liable for such harm.
  • Other accidents: More complicated rules determine if injuries caused by dangerous products, the accumulation of ice or snow, faulty professional services, or public utilities will be compensated. In addition, users of firearms, dog owners, and operators of restaurants, hotels, and public transportation may be liable for injuries they cause because the law imposes special responsibility for these hazards which your attorney can explain in more detail.

Which insurance policies will cover my costs?

Most automobile, homeowners and commercial liability policies contain "medical payments" coverage for medical expenses incurred after an accident without regard to fault. This coverage in auto policies applies to the insured family members and vehicle passengers, while homeowners and commercial policies cover only "others" or visitors to the premises.

Health, worker's compensation, disability insurance carriers or HMOs usually will pay benefits arising from accidental injuries. However, if your claim against another person succeeds, then the insurance provider will probably require you to repay these benefits to them.

If the accidental injury is primarily your own fault, then only health insurance (such as through your employer), worker's compensation, or medical payments coverage may apply.

Injuries caused by uninsured drivers are compensated by your own "uninsured motorist" coverage (if you have it) applying the same general rules as insured drivers.

Should I hire a lawyer?

If you know for certain that your injury is a minor one that will not result in time lost from work or school or substantial medical care, then you may want to settle it yourself in small claims court. (In Wisconsin, this court handles claims up to $5,000.) Of course, insurance claims adjusters generally try to settle claims inexpensively and on terms favorable to the insurer. If you have been seriously injured or are unsure as to the outcome of your injury, then an experienced personal injury attorney should always be consulted before you give any statements or sign papers of any kind and as soon after the injury as possible. You should be able to discuss your claim and the potential fee arrangements with your attorney before you commit to legal costs.

Personal injury attorneys usually handle claims on a "contingent" or percentage basis depending on the type, difficulty, and expense of the case. Contingent fees can range from 20 percent for worker's compensation claims to as much as 40 percent for difficult or complex cases. Contingent fee agreements must be in writing and include provisions for out-of-pocket expenses, which typically are paid by the attorney but paid back from any recovery, in addition to the fee for the attorney’s services.

 

 

How long do I have to decide?

The law requires you to settle your claim, start a lawsuit, or give special notice within limited times after the injury. The time you have to take action depends on the person or entity that caused your accidental injury. Some Wisconsin statutes of limitation and notice requirements illustrate the complexity and variety of these rules:

  • Injury generally – 3 years
  • Claims against city/county/school employee – 120 days
  • Claims against state employed physicians – 180 days
  • Claims under a fire insurance policy – 1 year
  • Worker's compensation claim – 2 years notice to employer, 12 years to file claim.

If you have any doubt about the statute of limitations or notice required you should consult an attorney. Other states may have shorter or more stringent limitations.

What is my claim worth?

A claim is valued and usually settled based upon an estimate of what a jury would likely regard as fair and reasonable compensation given the severity of the injury and the effects of the accident on your life, as well as the probability that a recovery against the wrongdoer is warranted. In addition to medical expense and wage loss, you are entitled to money damages for "personal injuries," including pain, suffering, and loss of enjoyment of life. Your attorney may point out additional damages authorized in special cases such as dog bites or flagrant misconduct.

Severe injuries requiring substantial medical treatment, extended absences from work, and permanent physical or mental impairments may command substantial compensation. Juries tend to believe that injuries that cannot be seen or demonstrated objectively are susceptible to exaggeration by the party seeking money damages, and insurance claim personnel tend to appreciate that fact.

When it comes time to settle a claim, both sides should have a clear "before and after" picture of the injuries and how they have affected the victim's life. The "difference" is the value of the claim. For example, a previously healthy, productive, young worker injured severely by an obviously culpable defendant will demand substantial compensation, especially where the victim has undergone substantial medical care, extended loss of earnings, and is facing a future of impaired earning capacity, disfigurement, pain, and suffering. On the other hand, the claim of an older person injured in questionable circumstances resulting in complaints that can be established only by the word of the claimant may be substantially discounted both by a jury and a claims adjuster.

If the injured person is found partially at fault for the accident causing the injury, then the amount of damages will be proportionately
reduced; likewise, if there is a substantial chance that the claim will not succeed for any reason, then any pretrial settlement will be reduced in most instances.

How and when will my claim be settled?

If the person responsible for your injury has insurance, an insurance adjuster will gather and try to verify the necessary medical treatment records, medical expense, and wage loss information and what permanent impairments have been caused by the accident. If the insurance company makes an offer that you (and your attorney) find acceptable, then the claim process is over. If no acceptable offer is made, then you may file a lawsuit. During the early months after a lawsuit has been filed, both sides can conduct depositions and other "discovery" to obtain more detailed and exacting proof about the nature of the claim.

As the trial date approaches, both the claimant and the insurance company usually take a closer look at the elements of the claim and available evidence to support it, and may try to settle the matter by informal discussion, mediation or pretrial conferences with the judge. Although about 95 percent of injury claims settle before trial, one cannot know in advance which claims will require a trial before a judge or jury for resolution. Once a claim is put in suit, it typically takes six to 18 months to resolve.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

2/10. © State Bar of Wisconsin

 

 

Bankruptcy: Answering Your Legal Questions

 

What is bankruptcy? What debts are discharged? What are the procedures for filing?

 

People who are having difficulty paying their debts sometimes consider bankruptcy to obtain relief from collection efforts, eliminate some or all of their debts, or restructure their debt payments to a more manageable level. This pamphlet gives you general information about bankruptcy and is not a substitute for consulting qualified legal advisors.

What is bankruptcy?

Bankruptcy is a uniform, federal court-supervised procedure to relieve individuals and businesses from debts, while protecting and preserving the rights of secured creditors and providing unsecured creditors with equal treatment of their claims.

There are four types of bankruptcy that individuals may select, depending on their particular financial circumstances. Most individuals file under Chapter 7 of the Bankruptcy Code (the Code), sometimes known as "straight" or "liquidation" bankruptcy. Chapter 11 is available to individuals, but generally is used by corporations to reorganize their business affairs. Chapter 12 is designed for use by farmers. Chapter 13, also referred to as a "wage-earner" or "debt-adjustment" plan, is available to individuals and unincorporated businesses that intend to use future income to pay some or all of one's debts according to a plan designed by the individual (within certain statutory limitations) to meet his or her needs.

This pamphlet concentrates on the more frequently used procedures, Chapters 7 and 13.

Who may declare bankruptcy?

There are relatively few limitations on who can file bankruptcy. The decision of whether to file, and under what Chapter, is based on each individual's need for relief from debts, their ability to pay, and their capacity and willingness to undertake a procedure that will have long-term consequences on their financial life. A debt-counselor or attorney can help you consider alternatives to bankruptcy.

Who is involved in bankruptcy proceedings?

In general, bankruptcy proceedings under any Chapter involve:

  • the debtor – the person who files bankruptcy, also known as "the petitioner";
  • the creditors – any persons, firms, or entities that claim the debtor owes them money;
  • the trustee – a court-appointed person who administers the bankruptcy proceedings and any property available for distribution to creditors (called the bankruptcy estate). The trustee represents the interests of the unsecured creditors, and must liquidate nonexempt assets, investigate the debtor's financial affairs, examine creditors' proofs of claim,provide information to parties in interest, file reports, estate tax returns and recommend, when appropriate, criminal or civil proceedings against the debtor who has committed fraud or other crimes in connection with the case.
  • the bankruptcy judge – who presides over any hearings on disputed matters in connection with the case.
  • the credit counselor – an independent financial advisor who must certify both before filing and before the debtor's discharge is granted that the debtor has completed the required credit counseling and financial management courses.

What constitutes the bankruptcy estate?

In general, the bankruptcy estate consists of all property owned by the debtor or in which the debtor has an interest whether individually or as a co-owner with any other person. In a Chapter 13 case, this also includes post-filing income from all sources, including the income of a nonfiling spouse. The estate includes property the debtor acquires by gift, devise, inheritance, divorce settlements, and life insurance proceeds the right to which arises within 180 days after the filing of the case, and also includes property recovered by the trustee under certain Code provisions. The estate is reduced by exempt assets.The balance of any property remaining for administration by the trustee constitutes the final bankruptcy estate.

What is Chapter 7 bankruptcy?

The most commonly used form of bankruptcy, Chapter 7, provides honest debtors who have limited financial means with a fresh start by eliminating many of a debtor's most common financial obligations through the discharge (which is generally granted at the end of the case). In return for the discharge, the debtor must turn over to the trustee certain nonexempt assets. These nonexempt assetsare sold with the proceeds distributed to creditors according to priorities set forth in the Code. Generally, priority expenses of administering the estate, unpaid wages, domestic support obligations, and taxes are paid ahead of ordinary unsecured claims. If assets remain for distribution to unsecured creditors, those creditors who file formal proofs of claim within the time fixed by the court share proportionately in the remaining proceeds. As discussed below, property that is subject to an otherwise unavoidable lien is generally not administered by the trustee. Such property is covered by the contract between the parties and the rights and remedies available under state law.

What are some of the advantages and disadvantages of filing bankruptcy?

Advantages:

  • With a few notable exceptions, bankruptcy stops all ongoing legal actions against the debtor, prevents a creditor from beginning new legal actions against the debtor, and prohibits creditors with notice of the bankruptcy case from contacting the debtor, or anyone else besides the debtor's attorney, to discuss or seek collection of a debt;
  • Most liabilities relating to credit card debts, medical bills, civil judgments, past-due accounts, and judgments due to repossessions and foreclosures may be discharged;
  • A debtor may be able to keep all or most of his or her property through federal and/or state exemptions; and
  • Certain liens and certain involuntary transfers (such as garnishments), may be avoided if timely action is taken.

Disadvantages:

  • Debts relating to certain taxes, governmental fines, forfeitures and restitution, criminal or fraudulent conduct, child and spousal support, drunk driving, most student loans, and willful and malicious injuries, may not be dischargeable;
  • Creditors having a mortgage or security interest in a home or in motor vehicles, may be able to repossess their collateral after the bankruptcy unless the debtor reaffirms the debt or redeems the collateral (see discussion below);
  • Bankruptcy filings are matters of public record and are generally noted on a debtor's credit history for 10 years, making it more difficult to obtain credit in the future. A stigma may be associated with bankruptcy which views a debtor as being financially or socially irresponsible. Some debtors find the proceedings embarrassing since they must submit to a public examination about their financial affairs and must provide detailed financial disclosures, which are open to the public;
  • In most cases, a debtor may receive a discharge only once in eight years. Debtors contemplating bankruptcy must consider their financial stability and ability to avoid the problems resulting in the bankruptcy during that period; and
  • There may be significant tax consequences from a bankruptcy.

What debts are not discharged in a Chapter 7 bankruptcy?

It is important to understand that not all debts are subject to discharge under Chapter 7. Among the common debts unaffected by bankruptcy are certain income and business taxes, alimony, child support, property divisions incident to divorce, governmentally imposed fines, forfeitures or restitution, most student loans, and liabilities resulting from drunken driving. Certain abuses of cash advances and credit cards on the eve of bankruptcy are presumed to be nondischargeable, as are debts arising from fraud, misrepresentation, theft, and willful and malicious injuries to a person or property.

For these latter forms of debts to be held nondischargeable, the creditor must bring a lawsuit against the debtor in the bankruptcy court within 90 days of the filing, and obtain a judgment declaring the debt, or some portion thereof, to be nondischargeable. In such a proceeding, the debtor has most of the rights attendant to any other civil trial in federal court, except the right to a jury trial.

The entire discharge may be denied or revoked if the debtor has engaged in fraud (such as making false statements, concealing assets, or fraudulently transferring assets) before, in, or in connection with the case. Proceedings to deny or revoke a discharge are subject to the right to a nonjury trial on the merits as are claims for nondischargeability of debts.

Finally, while a debtor's personal liability for debts secured by a home, car, boat, furnishings, and the like may be discharged in a Chapter 7 bankruptcy, the affected creditor's right to enforce its lien against collateral pledged for a loan (such as the right of repossession) is generally unaffected by bankruptcy. To retain the collateral, the debtor may have to reaffirm the debt or redeem the collateral. These concepts will be discussed later.

What property may I keep in a Chapter 7 bankruptcy?

Wisconsin law provides certain protections, called exemptions, that restrict the types of property a creditor holding a judgment may seize and sell to satisfy the creditor's claim.The federal bankruptcy laws also contain certain property exemptions that protect similar assets, but in quite different amounts. Specific dollar-value of these exemptions are not listed here because they are subject to legislative change. The types of property for which exemptions are permitted include a specified amount of equity in, among other things, one's personal residence, vehicles, household goods and personal effects, tools of trade, life insurance, and even deposit accounts. Generally, qualified retirement benefits may be excluded from the bankruptcy estate in whole or in part.

When a debtor's property (called collateral) is secured by a lien (such as a home mortgage, vehicle purchase loan, some furniture purchases, and so on), the debtor must decide whether to retain it or surrender it to the secured creditor. If the decision is to surrender the collateral, the unpaid portion of the loan (or any deficiency after sale of the collateral) generally is subject to discharge along with the unsecured debts.

If a debtor wishes to retain the collateral, the debtor must choose either to reaffirm the debt (sign a written document agreeing to continue making regular or agreed-upon payments on the debt and grant the creditor all prebankruptcy rights upon a subsequent default) or redeem the collateral (pay the creditor the present fair market value of the collateral in one lump-sum). Only items used for personal, household, and family use (including vehicles, but not real estate) are subject to redemption. A motor vehicle may not be redeemed for less than the balance due, if the loan is less than 2 ½ years old.

Finally, a debtor may be able to avoid certain liens on items held for personal or household use (but not vehicles or real estate) and retain the items without either reaffirming the debt or redeeming the collateral. Lien avoidance generally is a matter for the bankruptcy court, and usually has additional cost to the debtor beyond the basic cost of a bankruptcy case. Debtors should ask about additional costs when contacting an attorney about bankruptcy.

What is a Chapter 13 bankruptcy?

Chapter 13 is a proceeding under which a debtor proposes to his or her creditors and the court, a plan that enables the debtor to repay as much debt as is feasible given the debtor's financial circumstances. To be confirmed by the court, a plan must provide that the debtor's future income be subject to court administration. After determining a reasonable budget, the debtor's remaining income is paid (generally monthly) by the debtor's employer to the trustee who, after taking a commission, pays the creditors according to the plan provisions. A plan generally lasts three years, but may last up to five years if the court approves the longer period, or if a debtor is required to propose a five-year plan due to their income level. At the end of the plan, the debtor is entitled to receive a discharge of any remaining debt.

Who may file Chapter 13 bankruptcy?

Chapter 13 is limited to individuals and unincorporated businesses that have a regular source of income, and whose secured debts are less than $1,081,400 with unsecured debts of less than $360,475. The term "regular source of income" has been interpreted to mean income that is sufficiently definite and certain to enable the debtor to assign it to the trustee on a regular basis for payment by the trustee to creditors.

What are some of the advantages and disadvantages of Chapter 13 bankruptcy?

Advantages:

  • Bars post-filing creditor actions against co-debtors if the creditor will be paid in full under the plan;
  • Debtor retains all desired property, provided creditors obtain at least as much under the plan as they would under Chapter 7;
  • Debtor may have the ability to "write-down" secured non-homestead debts to the value of the collateral;
  • Debtor may be able to modify interest rates on some loans and extend the payment term on non-homestead debts to make them more affordable;
  • Debtor may cure loan defaults by making installment payments, and reinstate accelerated mortgage and other notes;
  • The Chapter 13 discharge is broader than under Chapter 7, so that more types of debts are dischargeable; and
  • Debtor may be able to force ("cram-down") affordable payments on secured and tax creditors that cannot be done under Chapter 7.

Disadvantages:

  • Debtor's future income is subject to administration by the trustee for up to three and possibly as long as five years;
  • Under the plan, the debtor must establish and live under a firm, but potentially adjustable budget during the repayment period;
  • The trustee is entitled to a commission on payments paid to creditors which reduces the value of what is paid to creditors;
  • Still appears as a bankruptcy on credit reports; and
  • Interest stops on most tax obligations paid under the Chapter 13 plan.

What procedures are involved in filing bankruptcy?

Bankruptcy involves a series of steps that usually include the following actions:

  1. The debtor gathers financial information for use in preparing the petition for bankruptcy and the schedules of assets, debts, income and expenses, the statement of financial affairs, and statement of intentions concerning secured debts;
  2. Obtaining the required pre-filing credit counseling;
  3. The debtor files the petition, schedules, statement of financial affairs, and pays the filing fee to the bankruptcy court;
  4. The court notifies scheduled creditors of the case filing, the meeting of creditors, the injunctive stay against creditor actions, the last date for creditors to file challenges to the debtor's discharge or the dischargeability of a particular debt, the initial status of assets available in the case, and other pertinent information;
  5. The debtor appears under oath and on record before the trustee to be examined at the meeting of creditors and submits to creditors' questions;
  6. The debtor completes the reaffirmation, redemption, or surrender of secured collateral according to the Statement of Intentions filed with the case; and
  7. All parties receive the discharge notice approximately 90 days after filing a Chapter 7 case or at the conclusion of payments in a Chapter 13 case.

A discharge will not be issued unless the debtor has completed a prescribed course in financial management.

Do I need a lawyer to file bankruptcy?

As with most other legal matters, any person may represent himself or herself before the bankruptcy court. Bankruptcy, however, is a highly refined procedure that is full of detail and interpretations based on prior case law. Each case is different, as are the consequences to the debtor. Proper planning in anticipation of bankruptcy may save a debtor money or property and countless hours of revising improperly completed documents. After a thorough analysis, bankruptcy may be unnecessary. A lawyer skilled in bankruptcy law can assist a debtor so that the process is as effective for the debtor as the specific circumstances allow.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

7/2011. © State Bar of Wisconsin

 

Divorce: Answering Your Legal Questions

Everyone hopes to never have to endure a divorce, one of life's most traumatic experiences. But some marriages deteriorate beyond repair. If you're facing a divorce, you need to know what lies ahead in the legal process. This pamphlet will answer many of your questions.

What are the grounds for divorce in Wisconsin?

The only basis for divorce in Wisconsin is that the marriage is "irretrievably broken." This means the husband and wife can find no way to work out their differences. A judge usually will find a marriage irretrievably broken even if only one spouse wants a divorce.

What is the difference between a divorce and a legal separation?

Divorce ends a marriage. Legal separation involves the same procedures as divorce, but the separated spouses can't marry others. Legal separation is an alternative for people who wish to avoid divorce for religious or other reasons. The court grants a legal separation on the ground that the marriage relationship is broken.

Like a divorce, a legal separation requires property division and determination of child custody and placement. The court may order maintenance and child support payments. (More on these topics later in this pamphlet.)

After one year, either spouse can seek to have a legal separation converted into a divorce without the other spouse's consent. Spouses who reconcile after a legal separation may apply to have the separation revoked.

What is an annulment?

An annulment dissolves a marriage that was invalid from the beginning. For instance, one spouse may have been too young, unable to have sexual intercourse, incapable of consenting to the marriage, or induced to marry by fraud or force.

How long must I live in Wisconsin before filing for divorce?

You must have been a Wisconsin resident for at least six months before filing for divorce here. Also, you must have lived at least 30 days in the county where you file.

How does either spouse start a divorce action?

Divorce usually begins with the filing of a petition for divorce and a summons. The petition for divorce gives the factual history of the marriage and states the desired outcome of the divorce. The summons states that a response must be filed within 20 days.

Sometimes the court finds it necessary to issue temporary orders, which are orders laying out the ground rules that each spouse must follow until the final divorce hearing. If temporary orders are necessary, two additional documents must be filed. The affidavit for temporary relief requests temporary arrangements for child custody, placement, or support, as well as any other needed provisions. The order to show cause contains the time and date of the hearing before the family court commissioner, who establishes the temporary orders.

After one spouse files the petition and summons with the clerk of court, these documents are served upon the family court commissioner (in certain counties) and the other spouse. The person asking for a divorce is called the petitioner, and the other spouse is the respondent. Both spouses are parties to the divorce action.

Can I get divorced if I don't know where my spouse is?

Yes, but you have to show the court that you made reasonable efforts to locate your spouse. You also must publish a notice in a local newspaper in an attempt to inform your spouse that you have started a divorce.

If it is at all possible to find an address, you must attempt to have notice of the divorce action served upon your spouse. The court has no power to order child support or maintenance unless your spouse has been personally served with notice. 

How long does it take to get a divorce?

Unless the court makes an exception for an emergency, at least four months (120 days) must pass between the serving of the initial papers and the final hearing. Most divorces take longer than four months. Several factors affect the length of the process: the complexity of the case, the ability of the spouses to agree on the issues, and the amount of other business before the trial court.

A divorce isn't effective until the final hearing. Once the divorce is final, both parties must wait at least six months before marrying other people.

Can my rights be protected between the start of a divorce action and the final hearing?

Yes. Every divorce includes an order that neither spouse can harass, intimidate, physically abuse, or impose restraints on the personal liberty of the other spouse or minor children (under age 18) of either spouse. In addition, neither spouse can encumber, conceal, destroy, damage, transfer, or otherwise dispose of property owned by either or both of the spouses, without the other spouse's consent or a prior order of the court or family court commissioner. There are exceptions for actions taken in the usual course of business, in order to buy necessities, or to pay reasonable divorce expenses, including attorney fees.

Parents who have minor children together have additional responsibilities. Neither parent can move minor children outside Wisconsin or more than 150 miles from the other parent within the state. Neither parent can remove minor children from Wisconsin for more than 90 consecutive days without the other parent’s consent or an order of the court or family court commissioner. Also, neither parent can conceal minor children from the other parent.

These restraining orders apply until dismissal of the divorce action or until the final judgment, unless the court orders otherwise. The court may punish a spouse who violates restraining orders.

In addition, the judge or family court commissioner may issue other temporary orders that protect your rights during the divorce process. For example, temporary orders may determine child custody and physical placement, who lives in the family home, payment of maintenance and child support, and payment of debts.

A person disobeying a temporary order can be fined, jailed, or both. Some law enforcement agencies, though, are reluctant to arrest a spouse for violating a divorce temporary restraining order. In cases involving violence, one spouse may seek to restrain the other by filing a domestic abuse injunction. Law enforcement agencies generally are more willing to act immediately on violations of an abuse injunction.  

How does the court decide who gets custody and physical placement of a child?

The term custody refers to the right to make legal decisions regarding a child, such as school choice, religious training, medical care, and so on. The court must presume that joint legal custody is in the child’s best interests – that is, both parents have decision-making authority,
unless there is evidence of interspousal battery or domestic abuse.

The term physical placement refers to how much time a child spends with each parent. You often hear of "visitation," but physical placement is now the correct legal term.

Many couples manage to work out their own agreement on child custody and physical placement. This is the best solution for all
concerned. The two of you will no longer be spouses after divorce, but you still are parents of your children. By agreeing on custody and placement, you will be better able to communicate with each other for years to come. And your children are less likely to be caught in the middle of parental disputes, one of the worst after-effects of divorce.

When couples have trouble agreeing on custody or placement, the judge or family court commissioner refers them to family court counseling. If the spouses still fail to work out their differences, the judge decides on custody and placement based on the child's best interests.

To make this decision, the judge weighs several factors. The court may also appoint a guardian ad litem, an attorney who represents the child's interests. To learn more, see the State Bar's pamphlets, Answering Your Legal Questions About Custody and Placement and Answering Your Legal Questions About Guardians Ad Litem in Family Court.

How does the court determine child support payments?

If a parent has physical placement with the child less than 25 percent of the time, the court usually bases child support on a percentage of that parent's gross (pre-tax) income. The standard support percentages are: 17 percent for one child, 25 percent for two children, 29 percent for three children, 31 percent for four children, and 34 percent for five or more children. However, these percentages may be reduced for higher income levels. In addition, the court may adjust the standard support percentages upward or downward, if it determines that applying the standard percentages would be unfair in a particular case.

If each parent has at least 25 percent physical placement with the child, which is known as shared placement, each parent's gross income is considered in setting child support. Though the standard support percentages discussed above are part of the equation, the calculation is much more complex because it also considers the amount of physical placement each parent has with the child. In addition to the child support amount set by this calculation, shared placement parents also are responsible for the child's variable costs (such as child care, tuition, and special needs) typically in proportion to the time that the parent has physical placement with the child.

Sometimes one or both parents are paying child support already due to a previous divorce or paternity judgment. Under those circumstances, the court may reduce that parent's gross income available for child support in this new case before applying the standard support percentages and calculations discussed above.

If the court believes that either parent is shirking his or her obligation, the court may use the shirking parent's earning capacity, instead of actual earnings, as the income from which to set child support.

Even if the parent who receives child support fails to follow the physical placement schedule, the parent paying child support may not legally reduce or stop payments, unless that modification is specifically approved and ordered by the court. Doing so only hurts the child. 

What is maintenance?

Maintenance, formerly called alimony, is money one spouse pays to the other during or after a divorce.

Maintenance and child support are treated differently for tax purposes. A parent paying child support can't deduct it on his or her income tax return. And the parent receiving child support doesn't report it as income. By contrast, the person paying maintenance can deduct it on taxes, and the person receiving maintenance must report it as income.

How does the court decide whether to award maintenance?

A husband and wife may agree on whether maintenance is appropriate and, if so, what the maintenance amount and duration will be. If they don't agree, the judge decides these issues. The judge will consider:

  • the length of the marriage;
  • each spouse's age and physical and emotional health;
  • how property was divided;
  • each spouse's educational level;
  • each spouse's earning capacity;
  • the likelihood that the spouse seeking maintenance can become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage, and how long it would take to achieve this goal;
  • tax consequences;
  • any agreement of the spouses;
  • one spouse's contribution to the education, training, or increased earning power of the other; and
  • any other factor the court finds relevant.

What is a wage assignment?

A wage assignment is an order to an employer to deduct child support or maintenance payments from an employee's pay.

When the court orders a person in a divorce to pay support or maintenance, the order includes a wage assignment order for his or her employer. But if a wage assignment order would cause the payer irreparable harm, the court may allow the person to pay directly to the State Child Support Collection Fund, which forwards the money to the other spouse.

How does the court divide property?

Most of a couple's property, including assets such as retirement interests, can be divided in a divorce. One exception is property received either as a gift from a third party or as an inheritance, although even gifts and inheritances may be divided in some circumstances.

If the couple can't agree on how to divide property, the court decides. The court starts with the presumption that equal division is fair and proper. But the court may alter this by considering:

  • the length of the marriage;
  • the property owned by either spouse when they married;
  • whether one spouse has substantial assets the court can't divide;
  • each spouse's contribution to the marriage;
  • each spouse's age and physical and emotional health;
  • one spouse's contribution to the increased earning power of the other;
  • each spouse's earning capacity;
  • the desirability of awarding the family home, or the right to live there, to the parent with primary placement of minor children;
  • tax consequences;
  • agreements of the spouses; and
  • any other factor the court finds relevant.  

What is a default divorce?

A default divorce is one in which you and your spouse have no contested issues for the court to decide. A default hearing usually occurs soon after you file a final marital settlement agreement. This spells out all your arrangements for support, maintenance, and asset and liability distribution.

The default hearing cannot occur until after the 120-day waiting period expires, unless there is an emergency. At the hearing, upon approval of your agreement, the court will grant an absolute judgment of divorce.

Don't confuse "default divorce" with "no-fault divorce." A no-fault divorce means that the petitioner need not prove wrongdoing on the part of the other spouse in order to file for divorce. Wisconsin is a no-fault state. As noted earlier in this pamphlet, the only legal basis for divorce in this state is that the marriage is "irretrievably broken."

What if my spouse and I can't reach an agreement?

If you can't reach a final agreement, your case goes to trial. The trial date depends on the length of time needed for the hearing and the court's other business. Contested divorce trials are costly and involved. The court enforces rules of evidence, which contain many pitfalls for the unwary. The best way to avoid these is to hire an attorney.

Can spouses use the same divorce lawyer?

Ethical rules prohibit an attorney from representing both spouses in a divorce.

Occasionally an attorney represents one spouse, and the other spouse chooses to represent himself or herself. Divorces in which neither spouse uses an attorney also occur, particularly when the couple has no children and/or little or no property.

Exercise caution if you go through a divorce without a lawyer. Divorce is a lawsuit, often having hidden consequences. If you have little or no income to pay for an attorney, you may qualify for free help from a legal services agency.

Will the court order my spouse to pay for my attorney?

Under certain limited circumstances, the court may order your spouse to help pay your attorney fees. One example would be if your spouse violated a court order during the divorce. Usually, however, each party pays for his or her own lawyer.

May a woman use her former name after a divorce?

If a woman wants to resume using her maiden name or a former legal name, the court restores it as part of the divorce action. Or she may continue to use her married name, if she wishes.

What can I do if I'm dissatisfied with the final divorce judgment?

You can ask the court to reconsider its decision. You also can appeal to the Wisconsin Court of Appeals. Strict time limits exist for filing an appeal (usually 45 days).

If you are dissatisfied with a decision about maintenance, however, you should be aware of certain limits. The court can't revise a judgment that waives maintenance. If you want the court to reconsider an award of limited-term maintenance, you must file a motion before the maintenance period ends.

Can the final divorce judgment be changed in the future?

The trial court can modify certain orders, such as child support and physical placement, in the future, although usually you must show that a substantial change in circumstances has occurred since the current orders went into effect before a trial court can revise a judgment. In most cases, orders regarding property division cannot be changed, once the orders are approved by the court.

Can I move to a new location after the divorce?

If you have children, you may face limits on where you can move after a divorce, just as you do during a pending divorce. If you want to move out of state or more than 150 miles away from the other parent, you must provide notice by certified mail of your plans at least 60 days before the planned move. The other parent may file a written objection within 15 days of receiving the notice. The court then will refer you and your former spouse to mediation. The court also may appoint a guardian ad litem for your children.

What can I do if my former spouse disobeys a court order regarding custody, physical placement, child support, maintenance, or debt payments?

You must petition the court to enforce its order. This is known as a contempt motion. After receiving the court papers, your former spouse must appear in court to report whether he or she has followed the court's orders and to explain any lapses.

After hearing the facts, the court decides whether your former spouse willfully disobeyed. The court may find your former spouse in contempt and grant him or her an opportunity to correct the contempt. Failure to do so can result in as much as six months in jail. The court also may issue other orders as necessary to remedy the contempt.

If the other parent denies or substantially interferes with one or more periods of physical placement, you may bring a petition for enforcement of physical placement order. Usually the court must hold a hearing on such a petition no later than 30 days after it is served on the other parent. If the court finds that your former spouse intentionally and unreasonably denied you of one or more periods of physical placement, the court can issue various orders. These might include granting additional periods of physical placement to replace those denied or hindered, as well as awarding you money and attorney fees.

If my spouse fails to pay bills as ordered by the court, can the creditor sue both of us?

Yes. The court's order doesn't change your relationship with creditors – that is, the parties to whom you owe money. Creditors may sue either spouse and may repossess any property pledged as security. If the creditor sues only one spouse, that spouse may bring the other into the lawsuit.

What is mediation?

A mediator takes no one's side. His or her role is to help a couple to communicate and arrive at mutual agreements. Through mediation, you may be able to resolve disputes faster, with less bitterness, and at less cost than battling in court.

As mentioned earlier, the family court's counseling services provide mediation for couples needing help to settle child custody and placement issues. Family court counseling usually doesn't address property settlements, maintenance, or child support – unless these issues relate directly to child custody or placement. But you may discuss these issues if both of you agree in writing to do so.

Usually, the spouses split most of the family court counseling costs. For more information on family court counseling, see the State Bar's brochure, Answering Your Legal Questions About Custody and Placement.

Private mediation services also are available. Here a couple can discuss any issues pertaining to their divorce, and they pay all the mediation costs. Your lawyer can refer you to an appropriate service. See also the State Bar's pamphlet, Answering Your Legal Questions About Alternative Dispute Resolution.

What are cooperative and collaborative divorce?

In these processes, the focus is on settlement of issues. The goal is to reduce the emotional and financial effects of divorce by avoiding formal discovery and individual appraisal of assets. In a collaborative divorce, if the process fails, the attorneys for both spouses must withdraw and turn the case over to other attorneys. For more information on collaborative divorce in Wisconsin, go to www.collabdivorce.com. In a cooperative divorce, although the emphasis is on settlement, court is still available as an option, but only if all efforts at settlement fail. For more information about cooperative divorce in Wisconsin, go to www.cooperativedivorce.org.

What should I look for in a divorce lawyer?

Contrary to what many people believe, good divorce lawyers don't push their clients into full-scale war. This only leaves behind damage and resentments that can linger for years.

The best outcome is a divorce that allows two people to begin to heal and get on with their lives. Toward that end, divorce attorneys help their clients to settle their divorce, if at all possible, rather than to go to trial. As you ask for recommendations, you should seek a divorce lawyer who will:

  • act as a problem-solver and peacemaker;
  • be courageous enough to tell you things you may not want to hear; and
  • be courteous and cooperative in working with your spouse’s attorney.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

7/2011. © State Bar of Wisconsin

Divorce: Answering Your Legal Questions

Everyone hopes to never have to endure a divorce, one of life's most traumatic experiences. But some marriages deteriorate beyond repair. If you're facing a divorce, you need to know what lies ahead in the legal process. This pamphlet will answer many of your questions.

What are the grounds for divorce in Wisconsin?

The only basis for divorce in Wisconsin is that the marriage is "irretrievably broken." This means the husband and wife can find no way to work out their differences. A judge usually will find a marriage irretrievably broken even if only one spouse wants a divorce.

What is the difference between a divorce and a legal separation?

Divorce ends a marriage. Legal separation involves the same procedures as divorce, but the separated spouses can't marry others. Legal separation is an alternative for people who wish to avoid divorce for religious or other reasons. The court grants a legal separation on the ground that the marriage relationship is broken.

Like a divorce, a legal separation requires property division and determination of child custody and placement. The court may order maintenance and child support payments. (More on these topics later in this pamphlet.)

After one year, either spouse can seek to have a legal separation converted into a divorce without the other spouse's consent. Spouses who reconcile after a legal separation may apply to have the separation revoked.

What is an annulment?

An annulment dissolves a marriage that was invalid from the beginning. For instance, one spouse may have been too young, unable to have sexual intercourse, incapable of consenting to the marriage, or induced to marry by fraud or force.

How long must I live in Wisconsin before filing for divorce?

You must have been a Wisconsin resident for at least six months before filing for divorce here. Also, you must have lived at least 30 days in the county where you file.

How does either spouse start a divorce action?

Divorce usually begins with the filing of a petition for divorce and a summons. The petition for divorce gives the factual history of the marriage and states the desired outcome of the divorce. The summons states that a response must be filed within 20 days.

Sometimes the court finds it necessary to issue temporary orders, which are orders laying out the ground rules that each spouse must follow until the final divorce hearing. If temporary orders are necessary, two additional documents must be filed. The affidavit for temporary relief requests temporary arrangements for child custody, placement, or support, as well as any other needed provisions. The order to show cause contains the time and date of the hearing before the family court commissioner, who establishes the temporary orders.

After one spouse files the petition and summons with the clerk of court, these documents are served upon the family court commissioner (in certain counties) and the other spouse. The person asking for a divorce is called the petitioner, and the other spouse is the respondent. Both spouses are parties to the divorce action.

Can I get divorced if I don't know where my spouse is?

Yes, but you have to show the court that you made reasonable efforts to locate your spouse. You also must publish a notice in a local newspaper in an attempt to inform your spouse that you have started a divorce.

If it is at all possible to find an address, you must attempt to have notice of the divorce action served upon your spouse. The court has no power to order child support or maintenance unless your spouse has been personally served with notice. 

How long does it take to get a divorce?

Unless the court makes an exception for an emergency, at least four months (120 days) must pass between the serving of the initial papers and the final hearing. Most divorces take longer than four months. Several factors affect the length of the process: the complexity of the case, the ability of the spouses to agree on the issues, and the amount of other business before the trial court.

A divorce isn't effective until the final hearing. Once the divorce is final, both parties must wait at least six months before marrying other people.

Can my rights be protected between the start of a divorce action and the final hearing?

Yes. Every divorce includes an order that neither spouse can harass, intimidate, physically abuse, or impose restraints on the personal liberty of the other spouse or minor children (under age 18) of either spouse. In addition, neither spouse can encumber, conceal, destroy, damage, transfer, or otherwise dispose of property owned by either or both of the spouses, without the other spouse's consent or a prior order of the court or family court commissioner. There are exceptions for actions taken in the usual course of business, in order to buy necessities, or to pay reasonable divorce expenses, including attorney fees.

Parents who have minor children together have additional responsibilities. Neither parent can move minor children outside Wisconsin or more than 150 miles from the other parent within the state. Neither parent can remove minor children from Wisconsin for more than 90 consecutive days without the other parent’s consent or an order of the court or family court commissioner. Also, neither parent can conceal minor children from the other parent.

These restraining orders apply until dismissal of the divorce action or until the final judgment, unless the court orders otherwise. The court may punish a spouse who violates restraining orders.

In addition, the judge or family court commissioner may issue other temporary orders that protect your rights during the divorce process. For example, temporary orders may determine child custody and physical placement, who lives in the family home, payment of maintenance and child support, and payment of debts.

A person disobeying a temporary order can be fined, jailed, or both. Some law enforcement agencies, though, are reluctant to arrest a spouse for violating a divorce temporary restraining order. In cases involving violence, one spouse may seek to restrain the other by filing a domestic abuse injunction. Law enforcement agencies generally are more willing to act immediately on violations of an abuse injunction.  

How does the court decide who gets custody and physical placement of a child?

The term custody refers to the right to make legal decisions regarding a child, such as school choice, religious training, medical care, and so on. The court must presume that joint legal custody is in the child’s best interests – that is, both parents have decision-making authority,
unless there is evidence of interspousal battery or domestic abuse.

The term physical placement refers to how much time a child spends with each parent. You often hear of "visitation," but physical placement is now the correct legal term.

Many couples manage to work out their own agreement on child custody and physical placement. This is the best solution for all
concerned. The two of you will no longer be spouses after divorce, but you still are parents of your children. By agreeing on custody and placement, you will be better able to communicate with each other for years to come. And your children are less likely to be caught in the middle of parental disputes, one of the worst after-effects of divorce.

When couples have trouble agreeing on custody or placement, the judge or family court commissioner refers them to family court counseling. If the spouses still fail to work out their differences, the judge decides on custody and placement based on the child's best interests.

To make this decision, the judge weighs several factors. The court may also appoint a guardian ad litem, an attorney who represents the child's interests. To learn more, see the State Bar's pamphlets, Answering Your Legal Questions About Custody and Placement and Answering Your Legal Questions About Guardians Ad Litem in Family Court.

How does the court determine child support payments?

If a parent has physical placement with the child less than 25 percent of the time, the court usually bases child support on a percentage of that parent's gross (pre-tax) income. The standard support percentages are: 17 percent for one child, 25 percent for two children, 29 percent for three children, 31 percent for four children, and 34 percent for five or more children. However, these percentages may be reduced for higher income levels. In addition, the court may adjust the standard support percentages upward or downward, if it determines that applying the standard percentages would be unfair in a particular case.

If each parent has at least 25 percent physical placement with the child, which is known as shared placement, each parent's gross income is considered in setting child support. Though the standard support percentages discussed above are part of the equation, the calculation is much more complex because it also considers the amount of physical placement each parent has with the child. In addition to the child support amount set by this calculation, shared placement parents also are responsible for the child's variable costs (such as child care, tuition, and special needs) typically in proportion to the time that the parent has physical placement with the child.

Sometimes one or both parents are paying child support already due to a previous divorce or paternity judgment. Under those circumstances, the court may reduce that parent's gross income available for child support in this new case before applying the standard support percentages and calculations discussed above.

If the court believes that either parent is shirking his or her obligation, the court may use the shirking parent's earning capacity, instead of actual earnings, as the income from which to set child support.

Even if the parent who receives child support fails to follow the physical placement schedule, the parent paying child support may not legally reduce or stop payments, unless that modification is specifically approved and ordered by the court. Doing so only hurts the child. 

What is maintenance?

Maintenance, formerly called alimony, is money one spouse pays to the other during or after a divorce.

Maintenance and child support are treated differently for tax purposes. A parent paying child support can't deduct it on his or her income tax return. And the parent receiving child support doesn't report it as income. By contrast, the person paying maintenance can deduct it on taxes, and the person receiving maintenance must report it as income.

How does the court decide whether to award maintenance?

A husband and wife may agree on whether maintenance is appropriate and, if so, what the maintenance amount and duration will be. If they don't agree, the judge decides these issues. The judge will consider:

  • the length of the marriage;
  • each spouse's age and physical and emotional health;
  • how property was divided;
  • each spouse's educational level;
  • each spouse's earning capacity;
  • the likelihood that the spouse seeking maintenance can become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage, and how long it would take to achieve this goal;
  • tax consequences;
  • any agreement of the spouses;
  • one spouse's contribution to the education, training, or increased earning power of the other; and
  • any other factor the court finds relevant.

What is a wage assignment?

A wage assignment is an order to an employer to deduct child support or maintenance payments from an employee's pay.

When the court orders a person in a divorce to pay support or maintenance, the order includes a wage assignment order for his or her employer. But if a wage assignment order would cause the payer irreparable harm, the court may allow the person to pay directly to the State Child Support Collection Fund, which forwards the money to the other spouse.

How does the court divide property?

Most of a couple's property, including assets such as retirement interests, can be divided in a divorce. One exception is property received either as a gift from a third party or as an inheritance, although even gifts and inheritances may be divided in some circumstances.

If the couple can't agree on how to divide property, the court decides. The court starts with the presumption that equal division is fair and proper. But the court may alter this by considering:

  • the length of the marriage;
  • the property owned by either spouse when they married;
  • whether one spouse has substantial assets the court can't divide;
  • each spouse's contribution to the marriage;
  • each spouse's age and physical and emotional health;
  • one spouse's contribution to the increased earning power of the other;
  • each spouse's earning capacity;
  • the desirability of awarding the family home, or the right to live there, to the parent with primary placement of minor children;
  • tax consequences;
  • agreements of the spouses; and
  • any other factor the court finds relevant.  

What is a default divorce?

A default divorce is one in which you and your spouse have no contested issues for the court to decide. A default hearing usually occurs soon after you file a final marital settlement agreement. This spells out all your arrangements for support, maintenance, and asset and liability distribution.

The default hearing cannot occur until after the 120-day waiting period expires, unless there is an emergency. At the hearing, upon approval of your agreement, the court will grant an absolute judgment of divorce.

Don't confuse "default divorce" with "no-fault divorce." A no-fault divorce means that the petitioner need not prove wrongdoing on the part of the other spouse in order to file for divorce. Wisconsin is a no-fault state. As noted earlier in this pamphlet, the only legal basis for divorce in this state is that the marriage is "irretrievably broken."

What if my spouse and I can't reach an agreement?

If you can't reach a final agreement, your case goes to trial. The trial date depends on the length of time needed for the hearing and the court's other business. Contested divorce trials are costly and involved. The court enforces rules of evidence, which contain many pitfalls for the unwary. The best way to avoid these is to hire an attorney.

Can spouses use the same divorce lawyer?

Ethical rules prohibit an attorney from representing both spouses in a divorce.

Occasionally an attorney represents one spouse, and the other spouse chooses to represent himself or herself. Divorces in which neither spouse uses an attorney also occur, particularly when the couple has no children and/or little or no property.

Exercise caution if you go through a divorce without a lawyer. Divorce is a lawsuit, often having hidden consequences. If you have little or no income to pay for an attorney, you may qualify for free help from a legal services agency.

Will the court order my spouse to pay for my attorney?

Under certain limited circumstances, the court may order your spouse to help pay your attorney fees. One example would be if your spouse violated a court order during the divorce. Usually, however, each party pays for his or her own lawyer.

May a woman use her former name after a divorce?

If a woman wants to resume using her maiden name or a former legal name, the court restores it as part of the divorce action. Or she may continue to use her married name, if she wishes.

What can I do if I'm dissatisfied with the final divorce judgment?

You can ask the court to reconsider its decision. You also can appeal to the Wisconsin Court of Appeals. Strict time limits exist for filing an appeal (usually 45 days).

If you are dissatisfied with a decision about maintenance, however, you should be aware of certain limits. The court can't revise a judgment that waives maintenance. If you want the court to reconsider an award of limited-term maintenance, you must file a motion before the maintenance period ends.

Can the final divorce judgment be changed in the future?

The trial court can modify certain orders, such as child support and physical placement, in the future, although usually you must show that a substantial change in circumstances has occurred since the current orders went into effect before a trial court can revise a judgment. In most cases, orders regarding property division cannot be changed, once the orders are approved by the court.

Can I move to a new location after the divorce?

If you have children, you may face limits on where you can move after a divorce, just as you do during a pending divorce. If you want to move out of state or more than 150 miles away from the other parent, you must provide notice by certified mail of your plans at least 60 days before the planned move. The other parent may file a written objection within 15 days of receiving the notice. The court then will refer you and your former spouse to mediation. The court also may appoint a guardian ad litem for your children.

What can I do if my former spouse disobeys a court order regarding custody, physical placement, child support, maintenance, or debt payments?

You must petition the court to enforce its order. This is known as a contempt motion. After receiving the court papers, your former spouse must appear in court to report whether he or she has followed the court's orders and to explain any lapses.

After hearing the facts, the court decides whether your former spouse willfully disobeyed. The court may find your former spouse in contempt and grant him or her an opportunity to correct the contempt. Failure to do so can result in as much as six months in jail. The court also may issue other orders as necessary to remedy the contempt.

If the other parent denies or substantially interferes with one or more periods of physical placement, you may bring a petition for enforcement of physical placement order. Usually the court must hold a hearing on such a petition no later than 30 days after it is served on the other parent. If the court finds that your former spouse intentionally and unreasonably denied you of one or more periods of physical placement, the court can issue various orders. These might include granting additional periods of physical placement to replace those denied or hindered, as well as awarding you money and attorney fees.

If my spouse fails to pay bills as ordered by the court, can the creditor sue both of us?

Yes. The court's order doesn't change your relationship with creditors – that is, the parties to whom you owe money. Creditors may sue either spouse and may repossess any property pledged as security. If the creditor sues only one spouse, that spouse may bring the other into the lawsuit.

What is mediation?

A mediator takes no one's side. His or her role is to help a couple to communicate and arrive at mutual agreements. Through mediation, you may be able to resolve disputes faster, with less bitterness, and at less cost than battling in court.

As mentioned earlier, the family court's counseling services provide mediation for couples needing help to settle child custody and placement issues. Family court counseling usually doesn't address property settlements, maintenance, or child support – unless these issues relate directly to child custody or placement. But you may discuss these issues if both of you agree in writing to do so.

Usually, the spouses split most of the family court counseling costs. For more information on family court counseling, see the State Bar's brochure, Answering Your Legal Questions About Custody and Placement.

Private mediation services also are available. Here a couple can discuss any issues pertaining to their divorce, and they pay all the mediation costs. Your lawyer can refer you to an appropriate service. See also the State Bar's pamphlet, Answering Your Legal Questions About Alternative Dispute Resolution.

What are cooperative and collaborative divorce?

In these processes, the focus is on settlement of issues. The goal is to reduce the emotional and financial effects of divorce by avoiding formal discovery and individual appraisal of assets. In a collaborative divorce, if the process fails, the attorneys for both spouses must withdraw and turn the case over to other attorneys. For more information on collaborative divorce in Wisconsin, go to www.collabdivorce.com. In a cooperative divorce, although the emphasis is on settlement, court is still available as an option, but only if all efforts at settlement fail. For more information about cooperative divorce in Wisconsin, go to www.cooperativedivorce.org.

What should I look for in a divorce lawyer?

Contrary to what many people believe, good divorce lawyers don't push their clients into full-scale war. This only leaves behind damage and resentments that can linger for years.

The best outcome is a divorce that allows two people to begin to heal and get on with their lives. Toward that end, divorce attorneys help their clients to settle their divorce, if at all possible, rather than to go to trial. As you ask for recommendations, you should seek a divorce lawyer who will:

  • act as a problem-solver and peacemaker;
  • be courageous enough to tell you things you may not want to hear; and
  • be courteous and cooperative in working with your spouse’s attorney.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

7/2011. © State Bar of Wisconsin

 

 

 

Wills/Estate Planning: Answering Your Legal Questions

 

What is a will? Does everyone need a will? How is a will administered?

 

While you're living and healthy, you value being able to make your own decisions about your finances, property, health care, and raising your children. Should you die or become incapacitated, you hope others will handle these matters for you according to your wishes.

The only way to assure that will happen is through estate planning. This process involves weighing various personal and financial decisions and creating legal arrangements to carry out those decisions. This brochure looks at key estate-planning tools: wills, living trusts, powers of attorney, and living wills.

What is a will?

A will is a written document that allows you to designate:

  • who will receive your estate (your property that does not pass by beneficiary designation or joint ownership arrangement; see more below) after you die;
  • who will raise your children if you die while they're still minors, and your spouse is unavailable to care for them;
  • whether your beneficiaries receive their inheritance outright or in a trust; and
  • who will serve as your personal representative – that is, the person who will pay your bills and taxes and distribute the rest of your estate to your beneficiaries. (For more on personal representatives, see the State Bar of Wisconsin's pamphlet, Answering Your Questions About Probate.)

When should I write a will?

If you have accumulated some assets, and you care who will receive those assets after you die, it's time to write a will.

Anyone with minor children definitely should have a will. In it, you can name the person you want to raise your children, should something happen to you and your spouse. Discuss this carefully with the prospective guardian, to be sure he or she is up to the job. Also, name an alternate guardian in your will as a backup.

On the other hand, if you're a young adult, have no children, and own few possessions, you probably don't need a will yet. The state would distribute your possessions to your parents. But if you'd rather leave your car to your girlfriend, or your prized Spider Man comic book collection to a favorite nephew, then a simple will is a good idea.

What if I die without a will?

In this case, the court appoints a personal representative who distributes your entire estate to your surviving spouse or registered domestic partner — unless you have children from outside your current marriage. In that case, your spouse or registered domestic partner retains half the marital property and receives half your individual property, with the rest of your estate split equally among all your children, from this marriage and outside it. (See also the State Bar of Wisconsin's pamphlet, Answering Your Questions About Marital Property.)

If you have no spouse, registered domestic partner, or surviving children or descendants of children when you die, your estate goes to other surviving relatives. State law lists the order of inheritance as follows: parents, brothers and sisters, nieces and nephews, grandparents, and descendants of grandparents. The state school fund receives your assets if you leave no heirs closer than the descendants of your grandparents.

If you leave behind minor children and have named no guardian in a will, a court must choose a guardian. If a minor inherits money or property, it is likely the court will place it in a guardianship account. Ask yourself: Is that a decision you want someone to make for you?

Having a judge decide who will raise your children can be emotionally wrenching for other family members. Also, court-supervised guardianships entail extra costs. Avoid the upset and expense by naming a guardian in your will.

Finally, bear in mind that if you have no will, the court will appoint a personal representative to administer your estate. Having a will allows you to choose this person. Also, you can stipulate in your will that the personal representative need not post a surety bond, thus saving money for your estate.

What types of property pass to your beneficiaries outside of a will?

These include:

  • Survivorship marital property – goes directly to a surviving spouse. An example would be a house that has both spouses' names (and only their names) on the title.
  • Property that is jointly owned – goes to the surviving owner(s).
  • Life insurance proceeds and funds in IRAs and other retirement plans – go directly to beneficiaries you listed on the appropriate forms.
  • Transfer on Death (TOD) and Payable on Death (POD) assets and accounts – go directly to the beneficiaries named on the account or deed.

If all your property falls into the above categories, and you have no minor children, you might think you have no need for a will. You may be right. On the other hand, a will may still be wise.

For example, you and your spouse, the other joint tenant, or your beneficiary could die at the same time or that person could die before you. A will would enable you to name alternate beneficiaries. Also, you could save on estate taxes, thus leaving more to your beneficiaries, by using a will to set up a trust.

What makes a will legal?

To be valid, your will must be in writing, and you must date and sign it. At least two witnesses also must sign the will. They can do this after they watch you sign it. If they weren't present then, you can state to them that the signature is yours, and then the witnesses can sign. The witnesses should not be beneficiaries named in the will or your heirs as designated by law.

Can I write my own will?

Yes, if you comply with all the above-mentioned requirements to make your will valid. But if in creating your will, you encounter any questions or complexities you don't understand, it's a good idea to see your attorney. Remember, this document must spell out all the conditions for transferring your assets. And, if you have minor children, it names their guardian.

A will is an important document. You'll want to be sure it correctly expresses your wishes and that it's legally enforceable. A lawyer can give you advice about not only your will, but also other aspects of estate planning you might otherwise overlook. We'll discuss some of those later.

How does someone challenge my will?

A person can attempt to prove in court that:

  • you were under duress or undue influence when making your will;
  • you were incompetent or unable to understand the results of your will when writing it; or
  • your will does not meet the requirements that make it valid, as listed earlier.

How can I change my will?

You have two options. You can simply write a new will, which automatically replaces an older one. Or you can add a supplement, called a codicil, to your existing will. For a codicil to be valid, it must satisfy the same legal requirements as those mentioned for a will.

Where should I keep my will?

Place your will where it's safe from theft, fire, or other damage. A safe-deposit box is one possibility, although it may be difficult for your personal representative to access your safe-deposit box after your death. You also may deposit it with the register in probate for your county.

Be sure your personal representative knows where your will is. Some people also give a copy to their personal representative. You'd want to do this, for instance, if you include funeral preferences in your will. Usually the reading of a will doesn't happen until after a funeral. So you'd want your personal representative to have a copy on hand, to be able to carry out your funeral wishes.

Is a will written in another state legal in Wisconsin?

To be valid in Wisconsin, the will must comply with the laws of one of the following: Wisconsin, or the place where you properly signed your will, or the place where you lived when you properly signed your will.

Be aware, however, that Wisconsin has a marital property law and a same-sex domestic partnership law. If your will is from a jurisdiction with no such laws, you should have an attorney review your will. That way you can assure it still achieves the results you intend.

What is a trust created by a will?

You can use your will to create a trust upon your death. The trust holds your property for another person's benefit. For example, a trust may provide an income for your spouse. Or it can hold property for your minor children until they become adults.

You name a trustee to oversee the trust. The trustee can be either a trusted individual (a friend, relative, or professional advisor) or a financial institution (a bank, brokerage firm, or trust company). The trustee is responsible for protecting the assets, paying out income earned, and terminating the trust as your will instructs.

What is a living trust?

You can create a living trust to control your property while you are alive. The trustee then would control your property after you die. Under this arrangement, you sign documents to give your property to the trust. As long as you're living, the property usually is treated the same for tax purposes as if you still owned it.

An advantage of a living trust is that property can pass to heirs after you die without going through probate. A drawback is that buying, handling, or selling assets held in a living trust may be more cumbersome while you're alive. Ask your attorney how a living trust would affect your property.

For more information, see the State Bar of Wisconsin's pamphlet, Answering Your Questions About Revocable Living Trusts.

If I have a living trust, do I still need a will?

Yes. A will would be important for several reasons. You may have property that never got transferred to your trust while you were alive. You would need a will to transfer that property to your trust after your death. Or your estate might receive money after your death. For instance, if your death was the result of an accident, your estate may receive wrongful death benefits. Again, you would need a will to transfer this money to the trust.

You also need a will in order to name a personal representative and a guardian for your minor children. That's not part of setting up a living trust. A personal representative can take certain actions on behalf of your estate that a trustee cannot, such as pursuing a wrongful death claim.

What is a durable power of attorney?

This authorizes another person, called an agent, to act for you in financial matters. The agent's rights to act on your behalf depend on what you say in your durable power of attorney document. These rights might include the authority to sign legal documents, pay bills, buy and sell real estate, and take other actions on your behalf. Choose a person you trust absolutely.

A durable power of attorney can take effect in one of two ways. If you wish, it can take effect immediately. Your power of attorney may provide that it becomes effective at a later date or if you become incapacitated. A doctor, a judge, or some other person may be named to determine whether you are incapacitated. The latter is called a "springing" power of attorney.

A durable power of attorney ends at your death. Your agent retains no further authority to handle your finances. If you want your agent to settle your financial affairs after you die, you need to name that person as your personal representative in your will.

What is a durable power of attorney for health care?

This arrangement gives your agent the authority to make health care decisions for you when you're unable to make them yourself. This is a heavy responsibility for anyone to assume. Be sure you discuss your health care preferences with your agent, so he or she knows what you'd want. This makes the agent's job much less difficult during what may already be a stressful time.

To create a durable power of attorney for health care, you can use the standard state form. Or, an attorney can create an individualized document for you. Either way, a durable power of attorney must meet specific requirements for it to be valid.

Can I have the same agent for both finances and health care?

Yes, one person can serve as both. If you feel you need to name two different agents, be sure they can work together. This would avoid a situation, for instance, in which your agent for finances could interfere with health care decisions by refusing to pay certain medical bills.

What is a living will?

A living will is a separate legal document, not a part of your will. And, it's not the same as a durable power of attorney for health care. The latter allows your agent to make health care decisions for you. A living will, on the other hand, allows you to state in writing your preferences about life-prolonging medical treatment.

In a living will, you can declare that you wish medical professionals to withhold or withdraw life-sustaining procedures or non-orally ingested food and water — if you are in an incurable condition, or you're near death, or you're in a persistent vegetative state.

Your living will takes effect only when you become incapacitated, cannot speak for yourself, and there's no hope for your recovery.

Your durable power of attorney agent also can make these sorts of end-of-life health care decisions for you, if you grant that power. If you have both a living will and durable power of attorney for health care, the latter rules if there is any conflict between the two.

The current law regarding living wills went into effect Nov. 25, 1991. If your living will was written before then, you should have your attorney review it to be sure it still expresses your wishes.

For more information on durable power of attorney for health care and living wills, see the State Bar of Wisconsin's pamphlet, Answering Your Questions About Health Care.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

1/2011. © State Bar of Wisconsin

 

 

 

Arrest: Answering Your Legal Questions

Are all arrests the same?

No. In some arrests, you're charged with a crime, while in others you're not.

You're charged with a crime only if the possible penalty includes time in jail or prison. There's one exception, though: you may face jail time for failing to pay a fine or forfeiture, but this failure isn't considered a crime.

In most cases, traffic offenses and city, town, or county ordinance violations are not criminal offenses. Certain offenses can be charged as either ordinance or criminal offenses – for example, retail theft (shoplifting) or disorderly conduct. And some offenses are non­criminal for first time offenders but criminal for second time violators. The most common example of this is operating a motor vehicle while under the influence of intoxicants.

A monetary penalty for a crime is called a fine. For a noncriminal offense, it's called a civil forfeiture.

There are some other important differences between criminal and noncriminal cases. First, a criminal conviction may have a negative effect on your employment opportunities, school applications, professional licensing, and so forth. Second, in a criminal case, the prosecution must prove you guilty beyond a reasonable doubt – a stricter requirement than for a noncriminal case. Finally, you have more legal rights in a criminal case, such as the right to remain silent and the right to the assistance of an attorney. In a noncriminal case the prosecution can call you to the stand and force you to testify against yourself.

What happens if you're charged with a noncriminal offense?

If you're charged with an ordinance or traffic offense that is not a crime (such as speeding), you'll be given a citation. In most cases you won't be taken into custody. Police may not search you or your property without permission if you are not taken into custody for a noncriminal offense. The citation will usually give you a choice of paying a forfeiture or going to court. It will state a date for you to appear in court if you choose not to pay the forfeiture.

Your first court appearance is known as the arraignment, during which you enter a plea of "guilty," "not guilty," or "no contest."

The "no contest" plea means that you are not contesting the offense charged. The "no contest" plea will result in a conviction, but the conviction cannot be used against you in a lawsuit. For instance, let's say you have an auto accident. As a result of the accident, you're given a traffic citation for a violation. In this case you may want to plead "no contest," in case the other driver decides to sue you.

In most ordinance or traffic cases, when you plead "not guilty" you're given a pretrial date and a trial date. In noncriminal cases, you do not have an automatic right to a jury trial. Unless you specifically demand a jury trial and pay the required fee within 10 days of your initial appearance, your trial will be held before the judge. At the pretrial you'll meet with the prosecutor and try to settle the case. For example, you may try to change a speeding charge to a lesser point violation.

If you can't resolve the charge at pretrial, you must appear at the trial. You may or may not want to have an attorney, depending upon the seriousness of the offense, the status of your driver's license, and so on.

If the judge finds you guilty and you don't pay the forfeiture by the deadline for payment, your driver's license may be suspended if the violation is for a traffic offense. Otherwise, you could be jailed or ordered to perform community service.

 

 

What happens if you're charged with a crime?

Usually you'll be taken into custody when you're arrested. The police may read you your rights, photograph you, and take your fingerprints. If you are arrested without a warrant, a judicial magistrate must determine whether there is enough probable cause to charge you, and this usually must be done within 48 hours of your arrest. The 48-hour rule does not apply to an arrest with a warrant, because a judicial determination of probable cause has already been made to support issuing the warrant.

Remember that you have two important rights: the right to remain silent and the right to a lawyer. If you are indigent, an attorney from the State Public Defender's office will be appointed. Police may not ask you any more questions if you claim either or both these basic rights. If you are unable to communicate with the court or your attorney because of a disability or a language barrier, an interpreter will be provided for you.

To be released from custody after your arrest, you may be required to post bail. In some cases, you can do this by a signature bond (a written promise to appear in court). In other cases, you may be required to provide either a secured surety bond (you put up property, such as a car or house), or cash (which may be posted by you or someone else). In addition, the judge may impose other conditions on you that he or she deems reasonable to assure your appearance or protects members of the community.

If you're convicted of a misdemeanor, you may be imprisoned for up to one year. Any "time" you serve will be in the county jail or house of correction. A felony charge is much more serious, because it can mean a year or more in prison. In either case, it's very wise to consult an attorney. If you can't afford one, the judge will refer you to the State Public Defender's office.

What are the steps in a criminal case?

In either a misdemeanor or a felony case, you'll have an initial appearance. At this appearance, you'll be served with a criminal complaint that outlines the charge, the probable cause supporting the charge, and the penalty. In a misdemeanor case, you'll also enter a plea at the initial appearance. If you plead "not guilty" to a misdemeanor, you'll be given a pretrial or a trial date.

For a felony, the next step is the preliminary hearing. At this hearing the prosecution must present enough evidence to convince the presiding magistrate that you should stand trial for a felony offense. If the state meets its burden of showing there is probable cause to believe you committed a felony within the jurisdiction, then the case proceeds to arraignment. At the arraignment, the district attorney will serve you with formal charges for a particular felony. At this time, you must enter a plea.

In both misdemeanor and felony cases, you have the right to a jury trial. The jury must consist of 12 people and the verdict must be unanimous. If you are convicted of a felony, you lose certain rights, including the right to possess firearms forever. You also lose the right to vote until your civil rights are restored at the completion of your sentence.

 

 

How does plea negotiation work?

In most cases, your attorney and the prosecutor will meet to discuss your case before it goes to trial. The prosecutor may offer to negotiate with your attorney.

There are many possible types of "plea agreements."

The prosecutor may offer a reduced charge. Or, if you're charged with several offenses, the offer may be to dismiss one or more charges or "read in" a charge (this means that you won't plead guilty to that charge, but the charge may be considered for sentencing). In return, you'll be expected to plead guilty or no contest to at least one offense. Sometimes the plea agreement will be a recommendation for a particular sentence. Or it may be an agreement that the prosecutor will make no sentence recommendation.

In any event, the judge does not have to honor the plea agreement. Your attorney and the judge must explain this to you. They must also explain all the possible results of a plea of guilty or no contest.

The judge will usually pronounce sentence immediately in a misdemeanor case. In a felony case, the judge may order a presentence investigation and set a separate sentencing date.

This is one in a series of consumer information pamphlets sponsored by the State Bar of Wisconsin. This pamphlet, which is based on Wisconsin law, is issued to inform and not to advise. No person should ever apply or interpret any law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.

Other titles include: Arrest; Bankruptcy; Buying/Selling Residential Real Estate; Choosing a Process for Divorce; Custody and Placement; Durable Powers of Attorney; Divorce; Guardians Ad Litem in Family Court; Health Care; Hiring/Working with a Lawyer; Landlord/Tenant Law; Marital Property; Personal Injury; Probate; Revocable Living Trusts; Small Claims Court; Starting a Business; Traffic Accidents; Wills/Estate Planning.

2/10. © State Bar of Wisconsin