Tony K. Steinmann v. Rose M. Steinmann
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2008 WI 43 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2005AP1588 In re the Marriage of: Tony K. Steinmann, Petitioner-Respondent, v. Rose M. Steinmann, Respondent-Appellant-Petitioner. REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at: 298 Wis. 2d 548, 727 N.W.2d 373 (Ct. App. 2006-Unpublished) OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: May 23, 2008 October 4, 2007 SOURCE OF APPEAL: COURT: COUNTY: JUDGE: Circuit Walworth Michael S. Gibbs JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: ZIEGLER, J., did not participate. ATTORNEYS: For the respondent-appellant-petitioner there were briefs by Daniel W. Hildebrand, Megan A. Senatori, and DeWitt Ross & Stevens, S.C., Madison; and Raymond E. Krek and Krek & Associates, S.C., Jefferson, and oral argument by Megan A. Senatori. For the petitioner-respondent there was a brief by Richard E. Reilly, Kathryn A. Keppel, and Gimbel, Reilly, Guerin & Brown, Milwaukee, and oral argument by Richard E. Reilly. 2008 WI 43 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2005AP1588 (L.C. No. 2003FA153) STATE OF WISCONSIN : IN SUPREME COURT In re the Marriage of: Tony K. Steinmann, FILED Petitioner-Respondent, MAY 23, 2008 v. David R. Schanker Clerk of Supreme Court Rose M. Steinmann, Respondent-Appellant-Petitioner. REVIEW of a decision of the Court of Appeals. ¶1 LOUIS B. BUTLER, JR., J. Affirmed. This is a review of an unpublished court of appeals opinion1 affirming a circuit court decision for Walworth County by the Honorable Michael S. Gibbs that awarded Steinmann divorce maintenance (Tony) and proceeding. from divided Rose Rose the Steinmann (Rose) Steinmanns' challenges the to property circuit Tony in a court's property division, which she argues included a flawed "doublecounting" 1 of assets; improper application of transmutation Steinmann v. Steinmann, No. 2005AP1588, unpublished slip op. (Wis. Ct. App. Dec. 20, 2006). No. rather than tracing principles; and an erroneous 2005AP1588 failure to allocate debts related to unpaid taxes on assets from a lawsuit settlement, rather principles. She also challenges the court's maintenance award. ¶2 than a proper application of tracing We conclude that Rose has failed to establish that the circuit court's reflected an property erroneous division exercise and of maintenance discretion. We awards further conclude that the court properly interpreted and applied the marital property agreement between Rose and Tony Steinmann, as well as the applicable facts of record and legal authority, in reaching its determinations. property division and maintenance award Consequently, we affirm.2 I ¶3 2004. Rose and Tony were married in 1994 and divorced in This was the second marriage for both, and no children were born of the marriage. Rose is the sole owner of Dairy Source, Inc. (DSI), a cheese brokerage and distribution company. At the time Corporation of the (Berner), marriage, which Tony worked purchased its for raw Berner Cheese materials from DSI, but in 1999, Tony resigned his position with Berner and Rose hired him to work for DSI. 2 We affirm this case, and do not remand it to the circuit court. The circuit court appropriately declined to issue an order regarding tax liability when such liability had not yet been determined by the IRS. We similarly decline to remand the issue of tax liability to the circuit court. However, our decision does not preclude either party from seeking a reapportionment of tax liability after the IRS determination is complete. 2 No. ¶4 2005AP1588 A 1999 lawsuit filed by Tony, Rose and DSI against Berner was settled in 2001, resulting in a $1.35 million payment to Tony, Rose and DSI.3 settlement to the IRS. None of the parties reported the Their failure to report the income from the settlement resulted in an IRS audit; the parties confirmed at oral argument that the IRS's final decision about tax liability, both as to the amount and who will be held liable in what amount, remains pending.4 3 The terms of the settlement agreement, directing Berner to deliver a check for $1.35 million made payable to Rose, Tony, and the trust account of DSI's attorney, were not followed. Rose testified that Berner made a wire deposit of the entire settlement payment into the trust fund of the law firm. The firm then, upon Rose's orders, transferred the money directly into Rose's savings account, referred to at trial as the "1114 account," which also contained $12,000 and some income tax money deposited by Tony, and funds from DSI and the sale of their Delavan home. Although Rose has alternatively argued that either DSI alone or she alone is entitled to the settlement proceeds, even going so far as to testify at trial that Tony was not entitled to any of the settlement money, such a representation of the settlement agreement is clearly contradicted by the settlement terms, as the circuit court found. 4 The amount of tax liability appears to be over $3 million, both as described by Rose's attorney at oral argument and as attested to in an affidavit filed by Attorney Daniel B. Geraghty, who represented Rose and DSI in connection with IRS matters. 3 No. After they married,5 the couple entered into a Limited ¶5 Marital 2005AP1588 Property Classification Agreement classifies various assets and income. Steinmanns' assets into categories (Agreement) which The Agreement divided the of "marital property," "survivorship marital property,"6 "individual property of Rose M. Steinmann," and "individual property of Tony K. Steinmann." individual property lists for both Rose and Tony The Steinmann include, in pertinent part: 1. All property whether Real or Personal which is listed on Schedule "A"[7] attached hereto and incorporated herein; and 2. All earnings of either Party after the date of the marriage. . . and 3. All property acquired at any time from a third party by gift, devise, bequest or inheritance; and 4. All property acquired with any individual Property or acquired in exchange for any Individual Property or acquired from the proceeds of sale of any Individual Property. . . . 5 Chris DiVincentis, a friend of the couple and the notary who signed the Marital Property Agreement (Agreement) at issue in this case, testified that the Agreement was backdated to March 3, 1995, at the request of Tony and Rose, in order to protect Rose's assets from Tony's ex-wife. DiVincentis could not recall when the Agreement was actually executed. 6 The only assets explicitly listed by the Agreement as "survivorship marital property" are those entitled "Personal Effects of either Individual Party to the other Party." However, "All Personal Effects" are also listed as both Rose's and Tony's "individual property." 7 Schedule "A" was not attached to the Agreement upon its inclusion in the record of this case. 4 No. ¶6 2005AP1588 The Agreement was silent as to maintenance obligations should the marriage dissolve, but specified that the Agreement would be binding on the issue of property division in the event of divorce. However, the Agreement also provided that it could be modified or waived "by written instrument duly subscribed and acknowledged by divorce trial, the parties." the Agreement In was a hearing determined preceding to be the valid and enforceable, as well as "binding upon [the] court for property division pursuant to § 767.255(3)(L), Wis. Stats. [2003-04]."8 ¶7 Prior to their marriage, Rose and Tony had purchased a residence in Delavan, Wisconsin, contributing to the down titled. During the payment. marriage, the for The $160,000, property couple with both was jointly purchased several additional properties, including a $2.2 million home on Lake Geneva (Loramoor residence). titled, and the mortgage This property was also jointly was held jointly. The Loramoor residence was purchased partially with proceeds from the Berner settlement. ¶8 Tony and Rose also purchased waterfront property on Lake Michigan and on Marco Island, Florida, and two boat slips at the Marco Island Yacht Club, all of which were also jointly 8 All subsequent references to the Wisconsin Statutes are to the 2003-04 version unless otherwise indicated. The divorcerelated statutes referenced in this opinion were renumbered and/or revised in 2005-06, but the circuit court's judgment being appealed in this case occurred in 2004 and was based on the 2003-04 version of the Wisconsin Statutes. We therefore will refer to the older version's numbering and text. 5 No. titled. 2005AP1588 These properties were all purchased at least partially through funds from Rose's 1114 savings account. Funds from that account were also used to purchase cars, boats, and an ATV. In addition, a series of private planes, yachts, and a Cadillac automobile owned by DSI were available for the Steinmanns' use.9 ¶9 In the exceeded Tony's. the years 1996 course of the marriage, Rose's income far For example, Rose's cumulative net income for through 2002 was $873,645, while Tony's net 2003. Two income for those years was $120,687.10 ¶10 Tony filed for divorce on February 28, months later, Rose terminated Tony from DSI. In May 2003, a family order court commissioner issued a temporary directing Rose to pay Tony $5,250 per month in maintenance because he was unemployed at the time. Loramoor residence. Rose was granted temporary use of the When Tony became employed again in June 2003, maintenance was reduced to $1,875 per month. However, the court vacated the maintenance awards the next year and ordered Tony to repay the $28,956 Rose had paid for maintenance, holding repayment in abeyance pending final property division. The 9 While Rose's brief describes the use of the DSI property as "business use," the circuit court found that: [t]he parties flew in DSI's private plane to places like Marco Island, Florida, where they purchased a vacant lot in the expectation of building a retirement or vacation home. They bought two yacht slips on the island, where they moored DSI's yacht. 10 During the trial, Tony testified intentionally minimized in order to obligations from his previous marriage. 6 that his salary was reduce his support No. court also continued ordered a the previously sale of ordered the Loramoor freeze on the 2005AP1588 residence11 1114 and account, allowing only expenses for the Loramoor residence to be deducted from that account, and ordering that funds in the account could not fall below $100,000. ¶11 After an eight-day bench trial, the circuit court, Honorable Michael S. Gibbs presiding, granted the Steinmanns' divorce on December 17, 2004. At the time of the divorce, Rose reported an annual salary of $140,000, and Tony reported $85,000 in annual income. ¶12 In a decision issued on April 26, 2005, the circuit court awarded Tony $2,000 per month maintenance for ten years, the length of the marriage. The court ruled that individual property covered by the Agreement remained the sole property of that individual, but divided the marital property equally, including the Delavan home, the Loramoor residence, the Marco Island lot, the Lake Michigan lot, and the Marco Island boat slips, all of which were jointly titled. The circuit court rejected Rose's argument that the court should apply tracing principles to designate those 11 properties her individual At a hearing on October 28, 2004, Rose was found in contempt of court for her failure to list the Loramoor residence for sale. She was ordered to serve six months in jail. The circuit court noted that she could purge the contempt by immediately executing a listing contract and vacating the premises. In November 2004, DSI purchased the Loramoor residence for the price of $3.23 million, and by order dated December 2, 2004, the sale was confirmed and the contempt sanction terminated. 7 No. 2005AP1588 property, explaining that while the properties may have been purchased with Rose's individual assets, the joint titles rendered them marital property. ¶13 The court also divided the Berner settlement equally among Tony, Rose, and DSI. The court noted that an IRS audit was underway regarding the income tax liability on the $1.35 million settlement, and declined to divide such pending tax liability of an undetermined amount. ¶14 A few divided equally. awarded to Tony, additional marital property An ATV, fishing boat, while Rose jewelry and household items. was awarded assets and a were automobile greater not were share of To arrive at a net equalization, in essence compensating Tony for being awarded the lesser share of those items not evenly divided, the court further ordered Rose to make a $13,433 equalization payment to Tony. ¶15 The court filed its Findings of Fact and Conclusions of Law and Judgment of Divorce on May 16, 2005. On June 8, 2005, after denying a motion for reconsideration and a motion to stay proceedings pending appeal, the court entered an order that the Corvette, pontoon boat, Marco Island lot, and Lake Michigan lot be sold and the proceeds divided equally. The court also ordered Rose to pay Tony $764,000, plus any accrued interest, for his share of the sale of the Loramoor residence. ¶16 Rose filed an appeal on June 16, 2005. In her appeal Rose made essentially the same arguments which she has continued to make to this court regarding tracing and transmutation, double-counting, tax liability, and the maintenance award. 8 She No. 2005AP1588 also argued that the circuit court erred when it ordered the Loramoor residence sold before trial.12 ¶17 The court of appeals affirmed the circuit court decision in Steinmann v. Steinmann, No. 2005AP1588, unpublished slip op. (Wis. Ct. App. Dec. 20, 2006), ruling that the circuit court did not err determinations. in its property Id., ¶41. division and maintenance The court rejected Rose's tracing arguments, concluding instead that the joint titles indicated donative intent and transformed the property from individual to marital property. pertinent assets part was considered Id., ¶¶21-24. that the harmless the circuit error, Berner that settlement The court further held in court's the as double circuit a counting court divisible of properly asset while "refus[ing] to speculate on the ultimate financial penalty on the still-incomplete IRS audit . . .," and that the court's maintenance award was not an erroneous exercise of discretion. Id., ¶¶31-34, 39-40. ¶18 Rose filed a petition for review, and we granted the petition. At oral argument, it was suggested that certain matters regarding the divorce were still pending in the circuit court. file On October 11, 2007, this court directed the parties to letters stating which matters circuit court. post-judgment are still pending in the In his response letter, Tony asserted that a order dated March 12 9, 2006, provides that tax She has apparently waived this argument, however, and we do not address it in this opinion. 9 No. liabilities estate. may be revisited upon the sale of 2005AP1588 certain real Rose responded that although there remains a pending sale of property, the circuit court did not hold open the issue of tax liability. In her response, she sought a remand order from this court directing the circuit court evidence on the tax issue when it comes in. to evaluate new Other than that, the parties appear to agree that there are no issues pending at the circuit court level and the divorce case has been designated as "closed." ¶19 to We conclude for the below reasons that Rose has failed establish that the circuit court's property division and maintenance award constitute reversible error. II ¶20 This case involves A circuit determinations. property division a circuit court's determinations in court's maintenance divorce discretionary awards and proceedings are within the sound discretion of the circuit court, and we will uphold such determinations unless the circuit court erroneously exercised its discretion. See King v. King, 224 Wis. 2d 235, 247-48, 590 N.W.2d 480 (1999); Steinke v. Steinke, 126 Wis. 2d 372, 383, 386, 376 N.W.2d 839 (1985). An erroneous exercise of discretion occurs if the circuit court makes an error in law, or fails to base its decision on the facts of record. See Meyer v. Meyer, 2000 WI 132, ¶15, 239 Wis. 2d 731, 620 N.W.2d 382. ¶21 This case also marital property agreement. contract, and its involves the interpretation of a A marital property agreement is a interpretation 10 is consequently a legal No. question which we review de novo. 2005AP1588 Gardner v. Gardner, 190 Wis. 2d 216, 240, 527 N.W.2d 701 (Ct. App. 1994). The primary goal in interpreting a contract is to determine and give effect to the parties' intent. Wis. Label Corp. v. Northbrook Prop. & Cas. Ins. Co., 2000 WI 26, ¶23, 233 Wis. 2d 314, 607 N.W.2d 276. When the language of a contract is unambiguous, we will apply its literal meaning. ¶22 We address Id. other questions of law as well in this case, such as the application of statutes to uncontested facts, which we generally review de novo. Minuteman, Inc. v. related to the interpretation of the See Alexander, 147 Wis. 2d 842, 853, 434 N.W.2d 773 (1989). III ¶23 circuit We first court's address property Rose's arguments division and Steinmanns' marital property agreement. There is no dispute that the Agreement is binding, valid and enforceable. Rather, the dispute between Tony and Rose pertains to the Agreement's reach and application in this case. Rose argues that in its property division determination, the circuit court should have applied tracing rather than transmutation principles. She argues that had the court properly applied tracing principles, it would have identified the jointly titled properties as her individual property under the Agreement and awarded Rose her full interest in those properties. She further argues that the court's conclusion that the deeds granting joint title reflected donative intent was factually as well as legally flawed. She also argues that the court improperly double-counted assets in 11 No. its property division. should not without have also 2005AP1588 Finally, she contends that the court treated allocating the the Berner pending settlement debts as related an to asset unpaid taxes on the settlement. A ¶24 We begin by addressing the meaning and potential relevance of the tracing and transmutation principles referenced in this case. give her Rose maintains that the circuit court failed to marital property agreement with consideration under Wis. Stat. § 767.255(3)(L). Tony proper In particular, Rose argues that the Agreement exempts those of her assets from division that can be individual property. traced to their classification as She argues that the application of tracing principles to her case would reveal that the property at issue13 remained her individual property despite being jointly titled because it was purchased with her individual assets. As such, she contends, the court's award of assets to Tony based on the assets' joint titles rather than how they were purchased violated the terms and intent of the Agreement. 13 At issue are the Loramoor property, the Lake Michigan lot, the Marco Island lot, and the two boat slips at the Marco Island Yacht Club. These properties were purchased during the marriage and jointly titled, to "husband and wife," with Tony also listed as joint obligor on the Loramoor home's mortgage. Rose paid for the properties with a combination of credit card and funds from her 1114 account. The Delavan property is in its own category, as it was purchased before Tony and Rose married, and was expressly designated "marital property" by the Agreement. 12 No. ¶25 In a Agreement to pursuant to motion be Wis. hearing, "binding on Stat. the the circuit court for 2005AP1588 court found property § 767.255(3)(L)." Section the division 767.255(3) provides: (L) Any written agreement made by the parties before or during the marriage concerning any arrangement for property distribution . . . shall be binding upon the court except that no such agreement shall be binding where the terms of the agreement are inequitable as to either party. The court shall presume any such agreement to be equitable as to both parties. The broader scheme of Wis. Stat. § 767.255, which addresses equitable property division in divorce actions, provides that while there division, is generally courts may a presumption nonetheless divide of equal property property in another manner after considering a number of factors, including marital property agreements. ¶26 Section 767.255(2), however, provides that gifted and inherited properties are generally exempt from that presumption. Parties asserting that property, or some part of the value of property, is exempt from division have the burden of establishing that the property is non-divisible at the time of divorce. See Derr v. Derr, 2005 WI App 63, ¶11, 280 Wis. 2d 681, 696 N.W.2d 170. prima facie division, establish case "[t]he by If a party meets that burden and makes a that the opposing sufficient subject party then property has countervailing the is exempt from opportunity evidence that to the property is not gifted or inherited, or otherwise has lost its exempt status because its character or identity has not been 13 No. preserved." 2005AP1588 Brandt v. Brandt, 145 Wis. 2d 394, 408-09, 427 N.W.2d 126 (Ct. App. 1988). ¶27 In this issues: case, we are asked to address two related whether, outside the context of gifted and inherited property, (1) tracing principles may be applied to determine a property's identity as individual property under a marital property agreement, and (2) transmutation principles and cases may be referenced to determine if that property has been reclassified as marital property. ¶28 The implication of the parties' arguments is that the answer to one of these questions will in turn determine the divisibility of the property in question. However, marital property classification, governed by ch. 766, is generally a separate inquiry from equitable property distribution, governed by ch. 767. See Lloyd v. Lloyd, 170 Wis. 2d 240, 258 & n. 6, 487 N.W.2d 647 (Ct. App. 1992). marital property classification Unfortunately, the parties' and divisibility arguments overlap, blurring the distinction between the two issues and chapters. Blurring the distinction even more is the face of the Agreement itself, which is titled under ch. 766 and primarily addresses property classification, but which also states that it is binding on ch. 767 property division determinations. The interrelationship between the two statutory chapters in such a context has not been explicitly addressed by the parties. We therefore do not resolve in this case the exact nature of the relationship between chs. 766 and 767 in cases such as this one in which ch. 767 equitable property distribution determinations 14 No. 2005AP1588 include consideration of ch. 766 marital property agreements, and in which marital property classification might be relevant to division. Rather, we focus on the tracing and transmutation arguments as presented by the parties. 1 ¶29 if it "Nonmarital property is exempt from property division retains Trattles, 126 its Wis. identity 2d 219, 1985)(emphasis in original). and 225, character." 376 N.W.2d Trattles 379 (Ct. v. App. The court of appeals has explained that character, which addresses how parties have chosen to title or treat non-marital assets, may be changed through transmutation of that non-marital property: Character addresses the manner in which the parties have chosen to title or treat gifted or inherited assets. Changing the character of such non-marital property can serve to transmute it to marital property. In such cases, the donative intent of the owner of the exempt property is an issue. Identity, on the other hand, addresses whether the gifted or inherited asset has been preserved in some present identifiable form so that it can be meaningfully valued and assigned. Brandt, 145 Wis. 2d at 410-11 (citations omitted). Donative intent is presumed where property is transferred, or transmuted, from non-divisible division. ¶30 property to joint tenancy subject to See Derr, 280 Wis. 2d 681, ¶¶35, 40. In Derr, 280 Wis. 2d 681, ¶14, the court of appeals further explained that tracing determinations and transmutation 15 No. (or donative intent)14 determinations are inquiries 2005AP1588 that may provide assistance to courts in ascertaining the identity and character of property. The court in Derr described tracing as useful in establishing a property's identity through its value and source, but suggested that its utility is limited because tracing does not generally reveal whether property is divisible. Id., ¶¶15-16. In contrast, Derr asserted, a donative intent inquiry employing transmutation principles can help determine 14 In Derr v. Derr, 2005 WI App 63, ¶40 n.9, 280 Wis. 2d 681, 696 N.W.2d 170, the court of appeals used the phrase "donative intent" in discussing "transmutation," while also endorsing the phrase "loss of character" as preferable to the word "transmutation." It is also worth noting that transmutation through conveyance of property through deed is of a different nature than transmutation through commingling of property through a bank account. See Brett R. Turner, Equitable Distribution of Property, § 5:65, at 649-50 (3d ed. 2005). Also compare Wis. Stat. § 766.63(1)(mixing separate and marital property in some cases "reclassifies the other property to marital property unless the component of the mixed property which is not marital property can be traced") with Wis. Stat. § 766.31(10)(explicitly allowing automatic reclassification through gift, conveyance, marital property agreement, and other means; and explaining that in cases involving transmutation through gifts, donative intent is the key to determining whether the property is marital or individual property). As such, in the context of mixing separate and joint property in bank accounts, property that can be traced to its individual source is able to retain its separate property identity and character, and has not necessarily been transmuted through commingling or donative intent. See, e.g., Doerr v. Doerr, 189 Wis. 2d 112, 132-35, 525 N.W.2d 745 (1994); Lloyd v. Lloyd, 170 Wis. 2d 240, 254, 487 N.W.2d 647 (Ct. App. 1992). However, even in the context of mixed property in bank accounts, donative intent can establish transmutation of a property's character into joint property. 16 No. the character of property as divisible or not. & n. 9. As such, tracing and 2005AP1588 See id., ¶¶23-40 transmutation are distinct principles which serve different functions related to identity and character.15 ¶31 holding Ironically, both Tony and Rose want us to limit the of Derr and other cases employing tracing or transmutation principles to cases involving gifted and inherited properties, but in different ways and only so far as such limitations would serve their respective arguments. ¶32 Tony echoes the conclusions of the circuit court that tracing principles are applicable only to gifted and inherited property, while donative intent and transmutation inquiries may be applied in the absence of gifted or inherited property. argues the reverse. are applicable in Rose She claims that while tracing principles this case, transmutation only applies to gifted and inherited properties, citing Gardner, 190 Wis. 2d at 236. ¶33 If Gardner created such a bright-line limitation, we conclude it was wrongly decided. 15 The cases Gardner cites as "by As one treatise explains, transmutation by gift or agreement has no connection with the law of tracing. In many if not most cases finding this form of transmutation, the formerlyseparate asset involved is easily identifiable. The basis for treating the asset as marital property is not any failure of identification, but rather a finding that the owner of the separate property voluntarily gave up his or her separate interest. Turner, Equitable Distribution of Property § 5:65, at 650. 17 No. their very terms . . . limited to cases involving 2005AP1588 gifted or inherited property," id. at 236 & n.1, do not in fact contain such limiting language. 463 N.W.2d 370 (Ct. See Fowler v. Fowler, 158 Wis. 2d 508, App. Trattles, 126 Wis. 2d 219. 1990); Brandt, 145 Wis. 2d 394; Rather, two of the three cases both use the broad phrase "separately owned property," not a more narrow descriptor limiting inherited property. application to just gifted and See Trattles, 126 Wis. 2d at 225 ("The transfer of separately owned property into joint tenancy changes the character of the ownership interest in the entire property into marital property which is subject to division."); Fowler, 158 Wis. 2d at 518 (quoting Trattles). See also Bonnell v. Bonnell, 117 Wis. 2d 241, 245, 344 N.W.2d 123 (1984) ("We have held in several cases that a spouse can transfer into the marital estate property which would otherwise be retained as the spouse's separate property."). prohibiting the application As such, if Gardner is read as of tracing and transmutation principles to cases not involving gifted and inherited property, Gardner was wrongly decided. However, the case need not be read as imposing such a bright-line rule. Rather, Gardner should be read as merely acknowledging that all of the cases that court's analysis addressed involved gifted and inherited property, without precluding the application of tracing or transmutation principles beyond that context. ¶34 We conclude that the parties are wrong in arguing that tracing and transmutation principles may not be applied to cases that do not involve gifted or inherited property. 18 However, both No. 2005AP1588 parties, as well as the circuit court in this case and the court of appeals in Gardner, have cause for singling out gifted and inherited property for different treatment: Stat. § 767.255(2) explicitly lists the text of Wis. gifted and inherited property among the types of property presumed to be exempt from property division. particular inherited As such, both tracing and transmutation have relevance property. for determinations Tracing can involving identify such gifted or property as originally indivisible, but proof of donative intent can still establish that the property's identity and character changed, and it was transmuted into divisible joint property. ¶35 In particular, when separate property presumed to be indivisible is transmuted through a joint tenancy, it is effectively transferred to marital property, and tracing does not cause the property to revert back to its original separate property identity. In such cases, "[t]he transfer of separately owned property into joint tenancy changes the character of the ownership interest in the entire property into marital property Trattles, 126 Wis. 2d at 225; which is subject to division." Fowler, 158 Wis. 2d at 518. ¶36 While tracing and transmutation may have particular significance in cases involving gifted and inherited property, we reject the attempts by the parties to establish an absolute prohibition on the use of tracing or transmutation principles absent the presence of gifted or inherited property. ¶37 We did not limit our holding that "the transfer of separate, inherited property into a joint tenancy changes the 19 No. 2005AP1588 nature of the property interest" in Bonnell, 117 Wis. 2d at 24647, to gifted or inherited property. Rather, we spoke in broader terms about joint tenancies being valid transmutations of separate property, "whatever the prior ownership interest of each party." Id. at 247 (emphasis added). In addition, as we have explained, Gardner does not establish such a bright-line rule excluding either tracing or transmutation principles from being applied in contexts outside gifted or inherited property. ¶38 Furthermore, there is no compelling policy reason for rendering transmutation inapplicable to or property donative initially intent classified principles as individual property under a marital property agreement. While gifted and inherited untouchable purposes property of is division generally under considered Wis. Stat. § 767.255, for property classified as separate property by a marital property agreement does not receive such an express presumption of indivisibility under § 767.255. more untouchable divisible Rose fails to explain why her property is even and property incapable than of being property transferred statutorily into rendered indivisible. 2 ¶39 Although we conclude that tracing and transmutation principles may be employed outside the context of gifted and inherited property, the application of these principles in the present case does not affect the ultimate regarding equitable property distribution. 20 determination No. ¶40 Turning to the issue of tracing 2005AP1588 principles specifically, we note that Rose has not established that even if the circuit court had applied tracing principles, it would have found that the properties in question were purchased solely with Rose's individual assets, rendering them individual property. While it is true that the properties were purchased with funds from Rose's 1114 account, it is also the case that the 1114 account included $12,000 deposited by Tony, funds from the sale of the jointly owned Delavan house, some income tax money deposited by Tony, and Tony's share of the Berner settlement. Rose has not provided any accounting proving that it was her money from the 1114 account, not Tony's, that was used to purchase the jointly titled property. ¶41 However, assuming without concluding that tracing principles, once employed, would establish that those properties were purchased with Rose's individual assets and not Tony's, and therefore identified as her individual property under the Agreement, such a determination would not answer the question of divisibility. tracing Rose does not explain why the mere application of principles to determine a property's classification under the Agreement precludes that property from either being reclassified as marital property, or, even more pertinently, divided under Wis. Stat. § 767.255. ¶42 Rose cites a number of cases applying tracing principles in various contexts, Weger v. Erasmus, 71 Wis. 2d 484, 241 N.W.2d 157 (1976); Truelsch v. Northwestern Mutual Life Insurance Co., 186 Wis. 239, 202 N.W. 352 (1925); Henika v. 21 No. 2005AP1588 Heinemann, 90 Wis. 478, 63 N.W. 1047 (1895); Derr, 280 Wis. 2d 681; Brandt, 145 Wis. 2d 394; and Trattles, 126 Wis. 2d 219. ¶43 None of these cases support the conclusion Rose asks us to make, since they do not address whether property, once traced to an individual property classification under a marital property agreement, is thereby precluded from later being reclassified as marital property through joint titling16 or from being divided under Wis. Stat. § 767.255. To the contrary, Derr, which Rose relies on, explains that "tracing is nothing more than the exercise of following an asset trail. If an asset, or component part of an asset, can be traced to a source, we then rely on other principles and rules to determine whether the traced asset is divisible or non-divisible." 2d 681, ¶19 (emphasis in original). Derr, 280 Wis. The "'mere fact that the existence of this subsequently purchased property can be traced to income generated by' non-divisible property does not mean that the purchased property is non-divisible." Id., ¶16 (quoting Arneson v. Arneson, 120 Wis. 2d 236, 244, 355 N.W.2d 16 (Ct. App. 1984)). Rather, we have explained that once property is transferred from separate property to joint ownership, the 16 Indeed, Wis. Stat. § 766.31 explicitly allows property classified as individual property under a marital property agreement (as well as gifts, inheritances, and other separate property) to be reclassified as marital property through a gift, deed or other conveyance. Wis. Stat. § 766.31(7), (10). As such, this statute appears to allow the type of reclassification, or transmutation, from which Rose claims her property is exempt, although not necessarily in a ch. 767 property division context. 22 No. 2005AP1588 property becomes part of the marital estate subject to division even if it is inherited property generally deemed indivisible. See Bonnell, 117 Wis. 2d at 246-47. ¶44 further Rose's reference to the text of the Agreement does not her applying dual tracing arguments that principles are the (1) necessary to forever effects of freeze the classification of her property as individual rather than marital property even after it is jointly titled, and (2) to shield the property from divisibility. the Agreement applied, or classified remain generally more as requiring tracing specifically, individual individual There is nothing in the language of to requiring More that under property property. principles Agreement the importantly, be property there must is no language in the Agreement prohibiting division of such property upon divorce. property Even the Agreement's "binding on the issue of division" language does not in itself preclude equitable division of property that has been jointly titled. ¶45 "[t]his Rose emphasizes agreement understanding the language represents between the the parties in the regarding that agreement entire Agreement and the property and obligations described herein, and this Agreement shall not be modified or waived except by written instrument duly subscribed and acknowledged by the parties." (Emphasis added.) What she does not discuss, however, is that clause's "duly subscribed" written instrument explain why does not of her properties would not qualify as such a written instrument. In a exception. deed Specifically, conveying 23 joint title Rose to one No. 2005AP1588 explicitly allowing such modification or waiver through written instrument, individual the Agreement property acknowledged as allows marital conveyances, as parties property occurred to through in reclassify signed this and case. In contrast, there is nothing in the language of the Agreement that prevents the jointly titled property in this case from being equitably divided under Wis. Stat. § 767.255. 3 ¶46 While it may be possible, though debatable, that Rose could trace her assets to their separate property identity under the Agreement, there is no question that Tony has nonetheless established marital that that property Consequently, by the separate the circuit property deeds court's was transmuted conveying joint transmutation to title. analysis was sound, clearly based on the facts of the record and on a correct application of the law, and therefore did not constitute an erroneous exercise of discretion. ¶47 In its decision, the court found that although some of Rose's assets may have been used to purchase certain properties, "they were then jointly marital property." titled, which transmutes them into The court also found "incredible" Rose's testimony that she did not mean to convey the properties to Tony during her lifetime but rather only wanted to ensure he received them in the event of her death while they were married. ¶48 Rose urges us to rule the circuit court's finding of donative intent to be erroneous on two grounds: 24 (1) the court's No. 2005AP1588 conclusion improperly relied on "transmutation" cases; and (2) the court should testimony. ¶49 not have rejected her "uncontroverted" We reject both arguments. As to the first point, for the reasons we have already set forth, the circuit court was not prohibited from applying "transmutation" transmutation principles, principles in although this case the is result less of applying transformative than it would be in gifted and inherited property cases, the property in this case not being established by statute as presumptively indivisible in the first place.17 Rose provides no authority titling for her argument that the joint of her individual property to Tony should not be honored as valid for purposes of reclassifying it as marital property. ¶50 We also reject Rose's contention that the court's donative intent determination lacked an evidentiary basis. honoring Rose's transfer of her individual property In through deeds granting joint title, the circuit court concluded that the language of the deeds created an inference of donative intent. ¶51 This conclusion comports with the well-established rule of law that the execution and delivery of a deed "raises the presumption the grantors intended the consequences of their 17 If Rose means to suggest that we should treat the Agreement as deeming her property to be presumptively indivisible in the same manner that Wis. Stat. § 767.255 renders other property presumptively indivisible, we decline to do so. While the Agreement does mention property division, it also indicates that the terms of the Agreement are subject to change by written instrument. 25 No. acts and what the deed purported to convey." 2005AP1588 Seraphine Hardiman, 44 Wis. 2d 60, 66, 170 N.W.2d 739 (1969). absence of countervailing reasonable inference. evidence, gifting is v. In the the only See Derr, 280 Wis. 2d 681, ¶33; Trattles, 126 Wis. 2d at 222-224. The circuit court's consideration of the deeds conveying joint title as evincing donative intent in this case was also consistent with Wisconsin cases recognizing a joint title gift presumption, i.e., that jointly titled property See Weiss v. is presumed to be a gift to the marital estate. Weiss, 122 Wis. 2d 688, 693, 365 N.W.2d 608 (Ct. App. 1985). See also Brett R. Turner, Equitable Distribution of Property, § 5:43, at 476 (3d ed. 2005)("The joint title gift presumption is presently recognized in a majority of American jurisdictions."); Oldfather, et al., Valuation and Distribution of Marital property is Property, transmuted § 18.07[3][c], "by placing at 18-68.2 separate (2005)(When property in the joint names of the spouses," the result in most jurisdictions is "a presumption that there was an intention to treat the property as marital property rather than its original form of separate property."). ¶52 Consequently, in cases such as this one in which property is jointly titled, the property does not retain its character as separate property but instead becomes part of the marital estate. See Weiss, 122 Wis. 2d at 692-93 (citing Bonnell, 117 Wis. 2d. at 247; Wis. Stat. § 700.17(2)(a)). ¶53 denied Weiss is similar to the present case in that Mr. Weiss that he had donative intent 26 when he created a joint No. tenancy. 2005AP1588 However, the court rejected his argument, explaining that Bonnell recognized the general principal "'that a spouse may by agreement, either express or implied, or by gift, transmute an item of separate property into marital property.'" Here also, Daniel has manifested his intent to make a gift by the conversion of his separate property into a joint tenancy with Carol. Just as Bonnell observed that "[i]t is clear that Mrs. Bonnell intended to create a joint tenancy in the subject properties," so also is it clear in this case that Daniel harbored a similar intent. Weiss, 122 Wis. 2d at 693 (citations omitted). Rose similarly denies circuit donative intent in this case, but the court rejected her denial, concluding that the deed conveyance and other evidence outweighed her verbal denial of donative intent. Rose argues that the circuit court should have considered the jointly titled property to be individual property because her uncontroverted testimony revealed that she did not intend to gift the property to Tony by including him on the deeds as joint owner. She cites Weberg v. Weberg, 158 Wis. 2d 540, 463 N.W.2d 382 (Ct. App. 1990), for the proposition that the circuit court cannot disregard uncontroverted testimony unless something in the case that discredits the testimony. there is However, Weberg does not support Rose's arguments. ¶54 In Weberg, the circuit court accepted Mr. Weberg's explanation that he had no donative intent, and the court of appeals did not upset that factual finding. Id. at 550-52. Unlike Weberg, this case involved transferring property through deeds conveying joint title, which the circuit court recognized 27 No. as effective transmutation. 2005AP1588 As such, even applying the same degree of deference in this case as the appellate court did in Weberg, we affirm, not reverse, the court's finding of donative intent. ¶55 The determination of credibility is similarly a matter within the circuit court's discretion. Wis. 2d 141, 151, 289 N.W.2d 813 Johnson v. Merta, 95 (1980). Here, the court reasonably found that Rose's donative intent was manifested by deeds creating joint tenancy. The court concluded that the deeds meant what they said and granted Tony joint title to the property as of the date of the title, and not just upon Rose's death. ¶56 While it may be both true and unsurprising that Rose was the only one who testified about her own subjective intent, the circuit court was not required to accept her testimony as credible. The court explained its basis for rejecting as incredible Rose's denial of donative intent in the following terms: Rose testified as to the careful, calculating and methodical steps she takes with regard to all aspects of her life and finances, yet wants the Court to believe that in this one area, she meant to keep the properties as hers alone and was only protecting Tony's interests should she die. The Court finds this testimony to be incredible. Rose is a business woman, well acquainted with the legal system as evidenced by her involvement in numerous lawsuits. If she truly meant to provide for Tony upon her death, yet protect her individual assets, the Court believes she would have titled everything in her name and taken care of Tony in a will. The Court finds that the only reasonable explanation for the joint titling was that it was the intent of the parties for the properties to 28 No. be jointly held. Therefore, subject to division. ¶57 We do reversible error. not view the they are court's 2005AP1588 marital and determination to be The circuit court was not obligated to accept Rose's testimony about her subjective thoughts as uncontradicted testimony. See Derr, 280 Wis. 2d 681, ¶40. Furthermore, courts may consider evidence other than contradictory testimony when finding testimony incredible. See Schwegler v. Schwegler, 142 Wis. 2d 362, 368, 417 N.W.2d 420 (Ct. App. 1987). the circuit court set forth a sufficient In this case, basis for its determination. ¶58 Rose has not established that the court's ruling was reversible error. Beyond the testimony which the circuit court found lacking in credibility, Rose points to no other evidence establishing that she did not intend for the joint titling of the property to take full legal effect until after she died. As such, we defer to the circuit court's finding of donative intent and its credibility findings, as the Weberg court did in that case. ¶59 emphasize As a final note on tracing and transmutation, we again that this case involves transmutation by gift, rendering tracing less relevant than if the case did not involve such evidence of donative intent. In this case, since the property at issue was not presumed indivisible by statute, it was potentially divisible all along. ¶60 The issues of tracing and transmutation are only relevant because Rose has, in essence, asked us to treat the 29 No. 2005AP1588 Agreement as creating a presumption of indivisibility equal to the presumption of indivisibility statutorily certain properties under Wis. Stat. § 767.255. accorded to We conclude that the Agreement did not, in the end, create such an extension of statutory would exemptions, and have been that rendered even divisible if it had, through the property transmutation by gift. ¶61 In sum, although we disagree with the circuit court to the extent that we reject any bright-line rule limiting tracing to gifted and inherited property court's ultimate conclusions. cases, we agree with the Rose has failed to show why the court's property division was erroneous. B ¶62 Rose argues "double-counting error." that the circuit court committed a She contends that the court erred by first awarding Tony half of the Delavan and Loramoor home sale proceeds and one-third of the Berner settlement, and then awarding him assets that had been purchased with those funds. Tony conceded in his court of appeals brief that the court may have technically engaged in double-counting, but argues that any error was harmless. ¶63 The court of appeals agreed, and so do we. To establish reversible error, the complaining party must establish that the error complained of has affected his or her substantial rights. Rose fails to Wis. Stat. § 805.18(2). demonstrate how any In this case, double-counting of assets affected her substantial rights, or more specifically, affected the equitable distribution of property. 30 It seems apparent from No. the court's calculations that the net 2005AP1588 result an even distribution would not have changed had the court left either the settlement or one of the joint properties out of its division. ¶64 In its property division, the circuit court divided the majority of marital assets equally between the parties. court allocated equal portions Tony, Rose, of and the $1.35 crediting Berner settlement to $450,000. Similarly, the jointly titled property was divided evenly between Tony and Rose. DSI, million The each party In the court's marital property division, the only equalization payment ordered was for Rose to compensate Tony for those assets to which she was allocated a greater share; namely, jewelry and certain household items. Otherwise, the court engaged in an even-handed division of the parties' assets. Removing one of the double-counted items from the list would not have had a meaningful effect on the property division, evenly. since the property still would have been divided As such, there is no apparent harm resulting from any double-counting by the court. ¶65 Rose argues that the harm resulting from the court's "double-counting" was settlement asset longer which as an existed," could the adversely that, "even court by characterizing the though," in her calculated an inflated affect DSI, Rose, or Berner words, Tony "it net in no total tax and business matters. ¶66 Rose's argument about potential consequences is speculative and undeveloped. 31 tax and business In addition, she No. provides no citation in the record to establish 2005AP1588 that the settlement money no longer existed by the time of the divorce. Her commentary about the settlement money being gone is also troubling in that it calls to mind the fact that Rose herself ordered the entire settlement award, which was supposed to be shared evenly distributed among directly herself, into Tony, her and her account. business, to Consequently, be she herself is responsible for any "nonexistence" of the settlement funds, which were distributed solely to her bank account by her order. property Rose implies that the settlement money was spent on the purchased during the marriage, but even if she had demonstrated what percentage of her property purchases came from settlement funds, which she has not, her expenditure of the settlement funds, which presumably included Tony's share, cannot be a valid basis for denying Tony credit for the settlement in the court's asset distribution calculations.18 18 For Rose to claim Another contradictory argument Rose makes in reference to the distribution of the Berner settlement funds is that as a result of the court's equal division of those assets, DSI, which she owns solely, could potentially be liable for one-third of the back taxes stemming from the Berner settlement. Remarkably, she claims that this result would be unfair in part because DSI did not receive one-third of the settlement, even though she herself is responsible for DSI not receiving its share, the funds having been deposited by her order into her bank account. Further, her argument that DSI received nothing conflicts with her argument to the court of appeals that DSI should be listed as the sole beneficiary of the Berner settlement for property division purposes. 32 No. 2005AP1588 that the money she had taken no longer existed, and that the court should therefore not credit Tony's share of the settlement to him in its asset allocations, is beyond the pale. ¶67 property Consequently, Rose's argument that the circuit court's division included an erroneous "double-counting" of assets which caused her harm does not withstand close scrutiny. To the extent the circuit court may have engaged in doublecounting by itemizing and dividing some assets that had already been converted harmless error. to other assets, such double-counting was See Helmbrecht v. St. Paul Ins. Co., 122 Wis. 2d 94, 123, 362 N.W.2d 118 (1985). C ¶68 refusal Rose also criticizes as erroneous the circuit court's to determination divide tax regarding liability taxes owed prior on the to a Berner final IRS settlement. The circuit court ruled: [T]he IRS audit is not complete and the Court does not speculate on what the ultimate financial penalty will be. However, it does seem to the Court that as both Rose and Tony failed to report the income, both will have a consequence. Therefore as each faces potential While it is a difficult challenge sorting through the conflicting testimony and argument presented in this case, it appears that Rose's argument comes down to the following series of conflicting statements: although the settlement proceeds were deposited into Rose's bank account and she controlled what became of them, and although she has argued that DSI was entitled to the entire settlement amount, she also argues that because DSI never received that amount from her, the court should award her for not paying DSI its fair share of the settlement. We decline to do so. 33 No. 2005AP1588 liability, this factor does not sway the balance of the property division. Rose maintains that this ruling violated Wis. Stat. § 767.255's mandate that debts be divided at divorce. ¶69 While it is true that Wis. Stat. § 767.255(1) requires courts to divide the property of divorcing parties, the statute does not require courts to divide every potential debt of the parties, particularly when the precise dollar amount of a debt has not yet been determined. in the course of their Circuit courts are not obligated property division consider hypothetical or theoretical debts. determinations to See Ondrasek v. Ondrasek, 126 Wis. 2d 469, 480, 377 N.W.2d 190 (Ct. App. 1985). ¶70 Rose attempts to distinguish Ondrasek by arguing that in this case, the multi-million dollar IRS tax liability was not hypothetical.19 However, the parties agree that the IRS case is still pending, with the final amount of tax liability for Rose and Tony still unknown. As such, the future tax liability potentially tied to the Berner settlement was too speculative to expect the circuit court to make any kind of precise division of debts based on an unknown amount of future tax liability. 19 Rose does not, notably, invoke Wis. Stat. 767.255(3)(k), the only provision of that statute explicitly addressing consideration of tax consequences. The provision only speaks in permissive, not mandatory terms, providing that a court may alter the presumptive equal property division, but only after considering a number of factors, one of which is the tax consequences to the parties of deviating from equal division. In this case, the circuit court did not deviate from an equal division scheme. Consequently, subsection (3)(k) did not come into play. 34 No. ¶71 2005AP1588 Although in 2004 the IRS issued a letter describing a $1,780,107 deficiency, that determination was appealed, and a final IRS determination as to the amount of taxes owed by Rose and Tony remains determination, liability pending. the based court on Without properly speculation or such refused a to final IRS allocate tax conjecture. See Logemann Bros. Co. v. Redlin Browne, S.C., 205 Wis. 2d 356, 363, 556 N.W.2d 388 (Ct. App. 1996); Brandt, 145 Wis. 2d at 419-420. ¶72 Rose further argues that the circuit court's failure to take into account the tax liability resulted in a grossly overvalued marital estate, citing Lacey v. Lacey, 61 Wis. 2d 604, 609-10, 213 N.W.2d 80 (1973). Lacey is inapposite, however, in that it pertains to a court's obligation to consider the real estate taxes which are due and owing on a property when considering that property's value. Id. The potential taxes that Rose argues the circuit court should have considered were not taxes due and owing for real estate. Most critically, unlike the taxes in Lacey, the amount of taxes owed in this case is still in dispute and under determination. ¶73 Had the circuit court allocated tax liability based upon speculation themselves based upon in back in the IRS this court case, to the parties amend the determination. We could have found circuit agree court's order with the lower courts in this case that the IRS is best qualified to determine what amount a divorcing couple owes the IRS. ¶74 Although it was not required to, the circuit court in this case did expressly consider the parties' potential future 35 No. tax liability process of its dividing § 767.255(1). arguments in On and property the the explained division parties' record, why it determination property the 2005AP1588 court rejected under Wis. considered them. The in the Stat. Rose's court recognized that both parties would likely face tax consequences due to the pending IRS case resulting from the Steinmanns' failure to report the Berner settlement, and that, considering the ongoing and unresolved nature of the IRS case, it would not be prudent to prematurely divide tax liabilities that had not yet been assigned.20 ¶75 It is apparent from the circuit court's explanation that it properly exercised its discretion. See Grace v. Grace, 195 Wis. 2d 153, 157, 536 N.W.2d 109 (Ct. App. 1995). We see no reasonable grounds for reversing the circuit court's decision not to allocate debts based on future tax liability, the exact amount of which is still a matter of speculation. 20 Although the amount of the tax liability for the $1.35 million settlement remains undetermined, the parties agree that the existence of tax liability for that settlement is certain. Indeed, the circuit court observed that "[t]here will be tax consequences to [Rose and Tony]." The matter is currently pending with the IRS, which presumably will determine the amount of taxes owed on the settlement. As we have noted, the circuit court declined to rule on the division of tax liability between Rose and Tony. This was a proper exercise of discretion, given the uncertain amount of the liability. However, the parties in this case may still move the circuit court to apportion tax liability after the IRS determines the amount of taxes they owe on the Berner settlement. 36 No. 2005AP1588 IV ¶76 Finally, maintenance award we address whether was erroneous. the circuit court's Stat. § 767.26 Wisconsin provides: Upon every judgment of annulment, divorce legal separation, or in rendering a judgment in action under s. 767.02(1)(g) or (j), the court grant an order requiring maintenance payments either party for a limited or indefinite length time after considering: or an may to of (1) The length of the marriage. (2) The age and physical and emotional health of the parties. (3) 767.255. The division of property made under s. (4) The educational level of each party at the time of marriage and at the time the action is commenced. (5) The earning maintenance . . . . capacity of the (6) The feasibility that the maintenance can become self-supporting of living reasonably comparable to that the marriage, and, if so, the length of to achieve this goal. party seeking party seeking at a standard enjoyed during time necessary (7) The tax consequences to each party. (8) Any mutual agreement made by the parties before or during the marriage, according to the terms of which one party has made financial or service contributions to the other with the expectation of reciprocation or other compensation in the future, where such repayment has not been made, or any mutual agreement made by the parties before or during the marriage concerning any arrangement for the financial support of the parties. 37 No. 2005AP1588 (9) The contribution by one party to the education, training or increased earning power of the other. (10) Such other factors as the court may in each individual case determine to be relevant. (Emphasis added.) In our review of discretionary maintenance awards, we determine whether the circuit court applied these statutory factors in a manner that achieves the dual objectives of fairness and provision of support. LaRocque v. LaRocque, 139 Wis. 2d 23, 32-33, 406 N.W.2d 736 (1987). ¶77 The determination of the amount and duration of maintenance is entrusted to the sound discretion of the circuit court, and we will not disturb these findings where the record shows that the court considered the facts and came reasonable conclusion consistent with applicable law. 139 Wis. 2d at 27. to a LaRocque, In this case, the court cited LaRocque, recognizing that a maintenance award must ensure that there is a fair and equitable financial arrangement between the parties. The court's methodical and carefully explained analysis reflects that it took such steps to ensure an equitable result. ¶78 In particular, the circuit court reviewed the relevant facts presented to it and applied them to the statutory factors outlined in Wis. Stat. § 767.26. of the Steinmanns' marriage, The court examined the length their health, education, and employment, the marital property agreement, Tony's ability to be self-supportive through his employment, tax problems, property division, and the parties' furtherance of each others' careers and earning abilities. 38 No. ¶79 The court also addressed Tony's ability 2005AP1588 to support himself "at a standard reasonably comparable to what he enjoyed during the marriage," elaborating: While Tony certainly has the means to support himself through his employment ($85,000 annual salary) the Court does not believe this salary can support him at a level reasonably comparable to what he enjoyed during the marriage. It is apparent to the Court that the parties enjoyed an opulent lifestyle . . . . The parties flew in DSI's private plane to places like Marco Island, Florida, where they purchased a vacant lot in the expectation of building a retirement or vacation home. They bought two yacht slips on the island, where they moored DSI's yacht. They enjoyed several successive yachts during the course of their marriage . . . . They purchased land on Lake Michigan with the hopes of building another home there as well. They traveled, and made improvements to their Delavan home. Toward the end of their marriage they purchased a home on Geneva Lake and made extensive improvements to it. Rose and Tony enjoyed a luxurious lifestyle together that Tony cannot sustain on his own salary. Rose earns $55,000 more per year in reported salary and continues to enjoy the perks that DSI provides. As the sole owner of DSI, she is the beneficiary of its profits as well. In support of its analysis, the court cited case law providing that maintenance immediately before is measured the divorce enjoying had they stayed married. by the and parties' which they lifestyles would keep Consequently, the court found it necessary to award maintenance because although Tony's income was good, "it is not commensurate with the income and living standard he enjoyed while married to Rose." ¶80 Rose has not explained how the circuit court's findings were clearly erroneous or offered any evidence from the record to contradict these findings. 39 She does not accuse the No. court of either failing to consider the Wis. 2005AP1588 Stat. § 767.26 factors or failing to do so in a manner which properly balances support and fairness concerns. Rather, she repeats her previous charge that the circuit court failed to take into account the Agreement, altering that now familiar refrain only to add in this context that the Agreement protects her income and assets not just from property division, but also from being subject to a maintenance award. ¶81 Perhaps § 767.26(8), the Rose means provision addresses marital property to of implicitly the invoke maintenance agreements. If so, Wis. Stat. statute she does that not explain how § 767.26(8), which directs trial courts to consider those mutual agreements "made by the parties before or during the marriage concerning any arrangement for the financial support of the parties," operates to shield her assets from a maintenance award. plainly applies This subsection of the maintenance statute only maintenance provisions. to those marital agreements with The Agreement in this case does not have such a provision. ¶82 Parties with marital property agreements are not, as a matter of law, exempt from maintenance awards. Rose had the opportunity upon drafting the Agreement to include a maintenance provision pursuant to Wis. Stat. financial support arrangements. not do so. § 767.26(8) concerning For whatever reason, Rose did A maintenance provision in the Agreement would have been an appropriate factor for the court to consider. 40 No. ¶83 2005AP1588 Rose further maintains that there is no precedent for allowing maintenance awards based upon an "opulent lifestyle" that was made possible by her individual assets, citing Gerrits v. Gerrits, 167 Wis. 2d 429, 443 n.8, 482 N.W.2d 134 (Ct. App. 1992). She further criticizes the "opulent lifestyle" conclusion of the circuit court as based as well on an improper consideration of the parties' yacht and company airplane. business use of a DSI company She argues that LaRocque, 139 Wis. 2d at 31-32, and Bahr v. Bahr, 107 Wis. 2d 72, 83, 318 N.W.2d 391 (1982), are distinguishable from the present case because in those cases, the spouses requesting maintenance had supported their long marriages by providing childcare and homemaking. ¶84 However, the text of Wis. Stat. § 767.26(6) clearly contemplates maintenance being awarded to help a former spouse maintain his opulent "standard of living reasonably comparable to that enjoyed during the marriage." text of the contributed degree. statute to Nor the requiring household does the that or statute There is nothing in the such spouses first childrearing to condition court's a a have certain order maintaining such a standard of living upon the opulent standard of living being the result of both incomes. Indeed, the general nature of a maintenance award is the payment of assets from one individual to another. If Tony's income had equally resulted in the Steinmanns' opulent lifestyle, that would actually diminish the appropriateness of a maintenance award under the statutory scheme of Wis. Stat. § 767.26. 41 Moreover, while Rose's brief No. 2005AP1588 describes the use of the DSI property as "business use," the circuit court found that: [t]he parties flew in DSI's private plane to places like Marco Island, Florida, where they purchased a vacant lot in the expectation of building a retirement or vacation home. They bought two yacht slips on the island, where they moored DSI's yacht. ¶85 circuit The amount and duration of maintenance is within the court's lifestyle that discretion, the parties and is enjoyed to in be the measured years "by the immediately before the divorce and could anticipate enjoying if they were to stay married." LaRocque, 139 Wis. 2d at 36. The marital standard of living which a court seeks to preserve is a case-bycase individual determination. 803, 819, 465 N.W.2d 252 Hubert v. Hubert, 159 Wis. 2d (Ct. App. 1990). "There is no requirement that maintenance is limited to an amount that will permit the recipient to enjoy an average standard of living." Id. (emphasis in original). As such, there is no basis for reversing the circuit court's discretionary determination. See Grace, 195 Wis. 2d at 157. ¶86 Rose also points out that the circuit court's maintenance awards were inconsistent in that it had terminated its initial maintenance award, but later reinstated an award. She further points out that the circuit court reversed itself in finding: (1) that a ten-year marriage was a long marriage, where previously it held that ten years was a short-term marriage; (2) that Tony could not enjoy a comparable lifestyle on his income, where it had 42 previously found he could No. 2005AP1588 sufficiently support himself; (3) that Tony had contributed to Rose's success with DSI, where it had previously found he had not; and (4) that Rose's income was not protected by the Agreement, where it had previously found that it was. ¶87 Despite the inconsistent seeming portrait Rose paints of the court's maintenance decisions, the court's findings were not necessarily contradictory. The court made initial findings for purposes of a maintenance award prior to trial. However, after an eight-day trial, the court reversed its position in light of new significantly, requirements evidence the as court not previously explained resulting from the available. change changes in in Most maintenance Tony's employment status. ¶88 Finally, we have ruled that courts may determine maintenance awards by starting with the proposition that the dependent partner may be entitled to fifty percent of the total earnings of both parties. Bahr, 107 Wis. 2d at 85. At the time of trial, Rose's income was $140,000 annually and Tony's was $85,000. amount The circuit court determined that maintenance in the of $24,000 per year, which fell short of equalizing Rose's and Tony's annual incomes and left Rose more than a fifty percent allocation, was fair to the parties. also noted annual that income to while the $116,000, maintenance she enjoyed The circuit court award many reduced Rose's financial and lifestyle perks from DSI that, if considered to be part of her income, would elevate her actual income far beyond the $140,000 annual salary the court calculated. 43 No. ¶89 2005AP1588 As with her other arguments, Rose relies extensively on the existence of the Agreement between her and Tony, but that Agreement once again does not speak to the issue at hand. Agreement is anything, weighs Because silent Rose in has maintenance award discretion, we on the maintenance granting favor maintenance of failed issue, to establish constituted defer to the a an that the erroneous circuit which, if award. court's exercise court's The of maintenance determination in this case. V ¶90 We conclude that the circuit court's property division and maintenance awards were not erroneous. that the court properly interpreted and We further conclude applied the marital property agreement between Rose and Tony Steinmann, as well as the applicable facts of record and law, in reaching its property division and maintenance award determinations. Consequently, we affirm.21 By the Court. The decision of the court of appeals is affirmed. ¶91 ANNETTE KINGSLAND ZIEGLER, J., did not participate. 21 We affirm this case, and do not remand it to the circuit court. The circuit court appropriately declined to issue an order regarding tax liability when such liability had not yet been determined by the IRS. We similarly decline to remand the issue of tax liability to the circuit court. However, our decision does not preclude either party from seeking a reapportionment of tax liability after the IRS determination is complete. 44 No. 1 2005AP1588
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