Well, I hate to boast at the expense of our neighbors to the south, but the anticipation of watching our Green Bay Packers fight it out at the big house is gratifying. So sorry for you Bears’ fans but Cutler just couldn’t handle Clay Matthews and company.
Having lived in Illinois for some time, I have experienced the hype and following of sports teams, and how Bears’ fans and Packer fans differ, the differences in the two states are plenty. It obviously doesn’t stop at the cliché of the football fans; it differs in geographic landscape, population interests, political interests, etc. But one area of differentiation that is a little less known, unless you are in the estate planning arena, is the systems of property ownership between the two states.
There are two systems of property ownership in the United States that affect the property owned by married couples: separate property and community property.
In states like Illinois, the separate property system is used. In this type of system, the name on the title determines which spouse owns that property. For example, in most separate property states, a paycheck issued in the name of the wife is the wife’s individual property. If she uses her paycheck to purchase real estate that is titled just in her name, legally that real estate is hers alone and she can do whatever she pleases without her spouse’s permission.
Conversely, in community property states the name on the title does not necessarily determine the ownership of a married couple’s property. Taking the same example from the above paragraph, the house (just in wife’s name), is community property and each spouse is entitled to one half interest in the property.
The way one’s property is classified is important because there is several estate planning advantages for married couples that own property in a community property state, like Wisconsin.
- Capital Gains Tax Benefits: In community property states, if a married couple owns property that has appreciated in value they receive what is known as a double step-up, this minimizes taxable capital gains.
- Estate Tax Benefits: Community property also is beneficial for married couples that wish to reduce their estate taxes. This is accomplished by placing the decedent’s assets in Trust. At the death of the first spouse, the surviving spouse is able to take full advantage of the deceased spouse’s applicable exclusion amount by transferring property to a Family Trust, rather than directly to the surviving spouse where it would be taxable in that spouse’s estate.
- Power of Discretion: Possibly the greatest benefit to Wisconsin’s property ownership system is that individuals can choose for themselves which property system they desire for part or all of their property. They can classify their property as community, separate, or a mix of the two depending on their individual circumstances by using a marital property agreement.
These benefits allow estate planning considerations to be a tad more flexible to us that reside in the land up north.
Finally, the biggest difference between the two states so far this year is that the Packers are winners and the Bears are ….well, done for the season.