Family Feud: Children Lose Claim Seeking Partial Ownership of Late Father’s Property

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A man’s death without an estate plan triggered a protracted legal squabble between his children and their stepmother over a parcel of property the father and stepmother purchased prior to their marriage. Because the man died without placing his intentions in writing, the Wisconsin courts had to decide the issue of ownership and concluded in Droukas v. Estate of Felhofer that the property was a marital asset, and belonged 100% to the stepmother. A single document, known as a marital property agreement, potentially could have avoided this entire litigation.

In March 1999, Gregory Felhofer and Mary Lynch purchased an empty lot in Franklin, Wisconsin. The couple began building a home on the property that summer and, in mid-September, with construction underway, the couple married. The city did not issue a certificate of occupancy until January 2000.

Eleven years later, the man died intestate. The home was not included in the man’s estate. Felhofer’s children from a previous marriage contested the probate distribution, arguing that the home was improperly omitted and that they were entitled to a one-half ownership interest in the property. The wife argued that the home was marital property and automatically became solely hers when her husband died. The children countered that the parcel could not be marital property because the purchase occurred before Gregory and Mary married.

A trial court and the Wisconsin Court of Appeals sided with the wife. In order to qualify as survivorship marital property, the couple must have acquired a homestead interest after they married, the court explained. The facts, in this case, fit this description because Gregory and Mary did not acquire a homestead interest in the property until the construction completed and the city issued a certificate of occupancy, which occurred in January 2000, four months after they married.

Unfortunately for this blended family, a single planning document could have avoided this entire battle. The appeals court rejected the children’s argument that the trial court ruling deprived their father the right to pass property to his heirs, specifically noting that “he could have stated his intentions in a marital property agreement signed prior to or after his marriage,” but had never executed such an agreement.

Marital property agreements can be extremely beneficial planning tools both for couples in first marriages, or subsequent marriages. Sometimes, couples in first marriages may create marital property agreements expressly identifying all their assets as marital, even those that would otherwise qualify as separate. These agreements may substantially simplify probate administration. For couples in second or subsequent marriages, with children from previous relationships, these agreements offer even more value. These couples can create an agreement keeping everything separate, or just some things, freeing up each spouse to distribute his/her property to his/her children at death.

Marital property agreements may provide real value to some couples for estate planning purposes. Another option available for couples in second or subsequent marriages involves the use of one or more living trusts to pass assets to one’s own children. The law presents multiple tools and options to accomplish estate planning objectives. To find out what plan offers the greatest benefit to your family, consult Madison estate planning attorney Daniel J. Krause of Krause Law Offices LLC. He has years of helping Wisconsinites just like you with creating a plan that adequately provides for all your loved ones when you die. Contact Attorney Daniel J. Krause today.

Reach us through our website to schedule your confidential, no-obligation initial consultation.

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