Case Title: Tony K. Steinmann v. Rose M. Steinmann

Citation: 2008 WI 43

Docket Number: 2005AP001588

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2008-05-23T00:00:00Z

Document:
2008 WI 43 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
CASE NO.: 
2005AP1588 
COMPLETE TITLE: 
 
 
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 App. 2006-Unpublished) 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: 
May 23, 2008   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
October 4, 2007   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Walworth   
 
JUDGE: 
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, 
 
          Petitioner-Respondent, 
 
     v. 
 
Rose M. Steinmann, 
 
          Respondent-Appellant-Petitioner. 
 
FILED 
 
MAY 23, 2008 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
LOUIS B. BUTLER, JR., J.   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unpublished court of appeals opinion1 affirming a circuit court 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 maintenance from Rose Steinmann (Rose) to Tony 
Steinmann (Tony) and divided the Steinmanns' property in a 
divorce proceeding.  Rose challenges the circuit court's 
property division, which she argues included a flawed "double-
counting" of assets; improper application of transmutation 
                                                 
1 Steinmann v. Steinmann, No. 2005AP1588, unpublished slip 
op. (Wis. Ct. App. Dec. 20, 2006). 
No. 
2005AP1588   
 
2 
 
rather than tracing principles; and an erroneous failure to 
allocate debts related to unpaid taxes on assets from a lawsuit 
settlement, 
rather 
than 
a 
proper 
application 
of 
tracing 
principles.  She also challenges the court's maintenance award. 
¶2 
We conclude that Rose has failed to establish that the 
circuit 
court's 
property 
division 
and 
maintenance 
awards 
reflected an erroneous exercise of discretion.  We 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 
property 
division 
and 
maintenance 
award 
determinations.  Consequently, we affirm.2  
I 
¶3 
Rose and Tony were married in 1994 and divorced in 
2004.  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 of the marriage, Tony worked for Berner Cheese 
Corporation (Berner), which purchased its raw 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 re-
apportionment of tax liability after the IRS determination is 
complete. 
No. 
2005AP1588   
 
3 
 
¶4 
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  None of the parties reported the 
settlement to the IRS.  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.  
No. 
2005AP1588   
 
4 
 
¶5 
After they married,5 the couple entered into a Limited 
Marital Property Classification Agreement (Agreement) which 
classifies various assets and income.  The Agreement divided the 
Steinmanns' assets 
into categories of "marital property," 
"survivorship marital property,"6 "individual property of Rose M. 
Steinmann," and "individual property of Tony K. Steinmann."  The 
individual property lists for both Rose and Tony 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. 
No. 
2005AP1588   
 
5 
 
¶6 
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 the parties."  In a hearing preceding the 
divorce trial, the Agreement was determined to be 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, for $160,000, with both 
contributing to the down payment.  The property was jointly 
titled.  During the marriage, the couple purchased several 
additional properties, including a $2.2 million home on Lake 
Geneva (Loramoor residence).  This property was also jointly 
titled, and the mortgage 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 divorce-
related 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. 
No. 
2005AP1588   
 
6 
 
titled.  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 course of the marriage, Rose's income far 
exceeded Tony's.  For example, Rose's cumulative net income for 
the years 1996 through 2002 was $873,645, while Tony's net 
income for those years was $120,687.10   
¶10 Tony filed for divorce on February 28, 2003.  Two 
months later, Rose terminated Tony from DSI.  In May 2003, a 
family court commissioner issued a temporary order directing 
Rose to pay Tony $5,250 per month in maintenance because he was 
unemployed at the time.  Rose was granted temporary use of the 
Loramoor residence.  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 that his salary was 
intentionally 
minimized 
in 
order 
to 
reduce 
his 
support 
obligations from his previous marriage.  
No. 
2005AP1588   
 
7 
 
court also ordered the sale of the Loramoor residence11 and 
continued a previously ordered freeze on the 1114 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 
properties 
her 
individual 
                                                 
11 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.  
No. 
2005AP1588   
 
8 
 
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 additional marital property assets were not 
divided equally.  An ATV, fishing boat, and automobile were 
awarded to Tony, while Rose was awarded a greater share of 
jewelry and household items.  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.  She 
No. 
2005AP1588   
 
9 
 
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 in its property division and maintenance 
determinations.  Id., ¶41.  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.  Id., ¶¶21-24.  The court further held in 
pertinent part that the circuit court's double counting of 
assets was harmless error, that the circuit court properly 
considered the Berner settlement as a divisible 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.  On October 11, 2007, this court directed the parties to 
file letters stating which matters are still pending in the 
circuit court.  In his response letter, Tony asserted that a 
post-judgment order dated March 9, 2006, provides that tax 
                                                 
12 She has apparently waived this argument, however, and we 
do not address it in this opinion. 
No. 
2005AP1588   
 
10 
 
liabilities may be revisited upon the sale of certain real 
estate.  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 to evaluate new 
evidence on the tax issue when it comes in.  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 We conclude for the below reasons that Rose has failed 
to establish that the circuit court's property division and 
maintenance award constitute reversible error. 
II 
¶20 This case involves a circuit court's discretionary 
determinations.  A circuit court's maintenance awards and 
property division determinations in divorce 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 involves the interpretation of a 
marital property agreement.  A marital property agreement is a 
contract, and its interpretation is consequently a legal 
No. 
2005AP1588   
 
11 
 
question which we review de novo.  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.  Id.  
¶22 We address other questions of law as well in this 
case, such as the application of statutes to uncontested facts, 
which we generally review de novo.  See Minuteman, Inc. v. 
Alexander, 147 Wis. 2d 842, 853, 434 N.W.2d 773 (1989).  
III 
¶23 We first address Rose's arguments related to the 
circuit court's property division and interpretation of the 
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 
No. 
2005AP1588   
 
12 
 
its property division.  Finally, she contends that the court 
should not have treated the Berner settlement as an asset 
without also allocating the pending debts related to 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.  Rose maintains that the circuit court failed to 
give 
her 
marital 
property 
agreement 
with 
Tony 
proper 
consideration under Wis. Stat. § 767.255(3)(L).  In particular, 
Rose argues that the Agreement exempts those of her assets from 
division 
that 
can 
be 
traced 
to 
their 
classification 
as 
individual property.  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.  
No. 
2005AP1588   
 
13 
 
¶25 In a motion hearing, the circuit court found the 
Agreement to be "binding on the court for property division 
pursuant to Wis. Stat. § 767.255(3)(L)."  Section 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 is generally a presumption of equal property 
division, courts may nonetheless divide 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.  If a party meets that burden and makes a 
prima facie case that the subject property is exempt from 
division, "[t]he opposing party then has the opportunity to 
establish 
by 
sufficient 
countervailing 
evidence 
that 
the 
property is not gifted or inherited, or otherwise has lost its 
exempt status because its character or identity has not been 
No. 
2005AP1588   
 
14 
 
preserved."  Brandt v. Brandt, 145 Wis. 2d 394, 408-09, 427 
N.W.2d 126 (Ct. App. 1988).   
¶27 In this case, we are asked to address two related 
issues:  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).  Unfortunately, the parties' 
marital 
property 
classification 
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 
No. 
2005AP1588   
 
15 
 
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 "Nonmarital property is exempt from property division 
if it retains its identity and character."  Trattles v. 
Trattles, 126 Wis. 2d 219, 225, 376 N.W.2d 379 (Ct. App. 
1985)(emphasis in original).  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 
property 
to 
joint 
tenancy 
subject 
to 
division.  See Derr, 280 Wis. 2d 681, ¶¶35, 40. 
¶30 In Derr, 280 Wis. 2d 681, ¶14, the court of appeals 
further explained that tracing determinations and transmutation 
No. 
2005AP1588   
 
16 
 
(or donative intent)14 determinations are inquiries 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.   
No. 
2005AP1588   
 
17 
 
the character of property as divisible or not.  See id., ¶¶23-40 
& n. 9.  As such, tracing and transmutation are distinct 
principles which serve different functions related to identity 
and character.15   
¶31 Ironically, both Tony and Rose want us to limit the 
holding 
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.  Rose 
argues the reverse.  She claims that while tracing principles 
are applicable in 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.  The cases Gardner cites as "by 
                                                 
15 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 formerly-
separate 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.   
No. 
2005AP1588   
 
18 
 
their very terms . . . limited to cases involving gifted or 
inherited property," id. at 236 & n.1, do not in fact contain 
such limiting language.  See Fowler v. Fowler, 158 Wis. 2d 508, 
463 N.W.2d 370 (Ct. App. 1990); Brandt, 145 Wis. 2d 394; 
Trattles, 126 Wis. 2d 219.  Rather, two of the three cases both 
use the broad phrase "separately owned property," not a more 
narrow descriptor limiting application to just gifted and 
inherited property.  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.").  As such, if Gardner is read as 
prohibiting 
the 
application 
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.  However, both 
No. 
2005AP1588   
 
19 
 
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:  the text of Wis. 
Stat. 
§ 767.255(2) 
explicitly 
lists 
gifted 
and 
inherited 
property among the types of property presumed to be exempt from 
property division.  As such, both tracing and transmutation have 
particular relevance for determinations involving gifted or 
inherited property.  Tracing can identify such 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 
which is subject to division."  Trattles, 126 Wis. 2d at 225; 
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 
No. 
2005AP1588   
 
20 
 
nature of the property interest" in Bonnell, 117 Wis. 2d at 246-
47, 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 
or 
donative 
intent 
principles 
inapplicable to property initially classified as individual 
property under a marital property agreement.  While gifted and 
inherited property is generally considered untouchable for 
purposes of division under Wis. Stat. § 767.255, property 
classified as separate property by a marital property agreement 
does not receive such an express presumption of indivisibility 
under § 767.255.  Rose fails to explain why her property is even 
more untouchable and incapable of being transferred into 
divisible 
property 
than 
property 
statutorily 
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 
determination 
regarding equitable property distribution.   
No. 
2005AP1588   
 
21 
 
¶40 Turning 
to 
the 
issue 
of 
tracing 
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.  Rose does not explain why the mere application of 
tracing 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. 
No. 
2005AP1588   
 
22 
 
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."  Derr, 280 Wis. 
2d 681, ¶19 (emphasis in original).  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. 
No. 
2005AP1588   
 
23 
 
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 Rose's reference to the text of the Agreement does not 
further her dual arguments that the necessary effects of 
applying tracing principles are (1) to forever 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.  There is nothing in the language of 
the Agreement generally requiring tracing principles to be 
applied, 
or 
more 
specifically, 
requiring 
that 
property 
classified as individual property under the Agreement must 
remain individual property.  More importantly, there is no 
language in the Agreement prohibiting division of such property 
upon divorce.  Even the Agreement's "binding on the issue of 
property 
division" 
language 
does 
not 
in 
itself 
preclude 
equitable division of property that has been jointly titled.   
¶45 Rose emphasizes the language in the Agreement that 
"[t]his 
agreement 
represents 
the 
entire 
agreement 
and 
understanding between the parties regarding 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 exception.  Specifically, Rose does not 
explain why a deed conveying joint title to one of her 
properties would not qualify as such a written instrument.  In 
No. 
2005AP1588   
 
24 
 
explicitly allowing such modification or waiver through written 
instrument, 
the 
Agreement 
allows 
parties 
to 
reclassify 
individual property as marital property through signed and 
acknowledged conveyances, as occurred in this 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 that that separate property was transmuted to 
marital 
property 
by 
the 
deeds 
conveying 
joint 
title.  
Consequently, the circuit court's transmutation 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 titled, which transmutes them into 
marital property."  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:  (1) the court's 
No. 
2005AP1588   
 
25 
 
conclusion improperly relied on "transmutation" cases; and (2) 
the 
court 
should 
not 
have 
rejected 
her 
"uncontroverted" 
testimony.  We reject both arguments. 
¶49 As to the first point, for the reasons we have already 
set forth, the circuit court was not prohibited from applying 
"transmutation" principles, although the result of applying 
transmutation principles in this case is less 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 for her argument that the joint titling 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.  In 
honoring Rose's transfer of her individual property 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. 
No. 
2005AP1588   
 
26 
 
acts and what the deed purported to convey."  Seraphine v. 
Hardiman, 44 Wis. 2d 60, 66, 170 N.W.2d 739 (1969).  In the 
absence 
of 
countervailing 
evidence, 
gifting 
is 
the 
only 
reasonable inference.  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 
is presumed to be a gift to the marital estate.  See Weiss v. 
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, § 18.07[3][c], at 18-68.2 (2005)(When 
property is transmuted "by placing separate 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 Weiss is similar to the present case in that Mr. Weiss 
denied that he had donative intent when he created a joint 
No. 
2005AP1588   
 
27 
 
tenancy.  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 donative intent in this case, but the circuit 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 there is 
something in the case that discredits the testimony.  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 
No. 
2005AP1588   
 
28 
 
as effective transmutation.  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.  Johnson v. Merta, 95 
Wis. 2d 141, 151, 289 N.W.2d 813 (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 
No. 
2005AP1588   
 
29 
 
be jointly held.  Therefore, they are marital and 
subject to division.   
¶57 We do not view the court's determination to be 
reversible error.  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).  In this case, 
the circuit court set forth a sufficient 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 As a final note on tracing and transmutation, we again 
emphasize 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 
No. 
2005AP1588   
 
30 
 
Agreement as creating a presumption of indivisibility equal to 
the 
presumption of 
indivisibility statutorily accorded to 
certain properties under Wis. Stat. § 767.255.  We conclude that 
the Agreement did not, in the end, create such an extension of 
statutory exemptions, and that even if it had, the property 
would have been rendered divisible through 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 cases, we agree with the 
court's ultimate conclusions.  Rose has failed to show why the 
court's property division was erroneous.   
B 
¶62 Rose argues that the circuit court committed a 
"double-counting error."  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.  The court of appeals agreed, and so do we.   
¶63 To establish reversible error, the complaining party 
must establish that the error complained of has affected his or 
her substantial rights.  Wis. Stat. § 805.18(2).  In this case, 
Rose fails to demonstrate how any double-counting of assets 
affected her substantial rights, or more specifically, affected 
the equitable distribution of property.  It seems apparent from 
No. 
2005AP1588   
 
31 
 
the 
court's 
calculations 
that 
the 
net 
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.  The 
court allocated equal portions of the $1.35 million Berner 
settlement to Tony, Rose, and DSI, crediting each party 
$450,000.  Similarly, the jointly titled property was divided 
evenly between Tony and Rose.  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, since the property still would have been divided 
evenly.  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 
that, 
by 
characterizing 
the 
Berner 
settlement as an asset "even though," in her words, "it no 
longer existed," the court calculated an inflated net total 
which could adversely affect DSI, Rose, or Tony in tax and 
business matters.  
¶66 Rose's argument about potential tax and business 
consequences is speculative and undeveloped.  In addition, she 
No. 
2005AP1588   
 
32 
 
provides no citation in the record to establish 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 among herself, Tony, and her business, to be 
distributed directly into her account.  Consequently, she 
herself is responsible for any "nonexistence" of the settlement 
funds, which were distributed solely to her bank account by her 
order.  Rose implies that the settlement money was spent on the 
property 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  For Rose to claim 
                                                 
18 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.   
No. 
2005AP1588   
 
33 
 
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 Consequently, Rose's argument that the circuit court's 
property 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 double-
counting by itemizing and dividing some assets that had already 
been converted to other assets, such double-counting was 
harmless error.  See Helmbrecht v. St. Paul Ins. Co., 122 Wis. 
2d 94, 123, 362 N.W.2d 118 (1985). 
C 
¶68 Rose also criticizes as erroneous the circuit court's 
refusal 
to 
divide 
tax 
liability 
prior 
to 
a 
final 
IRS 
determination regarding taxes owed on the Berner 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. 
No. 
2005AP1588   
 
34 
 
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.  Circuit courts are not obligated 
in the course of their property division determinations to 
consider hypothetical or theoretical debts.  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. 
No. 
2005AP1588   
 
35 
 
¶71 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 
pending. 
 
Without 
such 
a 
final 
IRS 
determination, the court properly refused to allocate tax 
liability based on speculation or 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 in this case, the parties could have found 
themselves back in court to amend the circuit court's order 
based upon the IRS determination.  We agree 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 
No. 
2005AP1588   
 
36 
 
tax liability in its property division determination in the 
process of dividing the parties' property under Wis. Stat. 
§ 767.255(1).  On the record, the court considered Rose's 
arguments and explained why it rejected them.  The 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.  
No. 
2005AP1588   
 
37 
 
IV 
¶76 Finally, 
we address whether the circuit court's 
maintenance award was erroneous.  Wisconsin Stat. § 767.26 
provides: 
Upon every judgment of annulment, divorce or 
legal separation, or in rendering a judgment in an 
action under s. 767.02(1)(g) or (j), the court may 
grant an order requiring maintenance payments to 
either party for a limited or indefinite length of 
time after considering: 
(1) The length of the marriage. 
(2) The age and physical and emotional health of 
the parties. 
(3) The division of property made under s. 
767.255. 
(4) The educational level of each party at the 
time of marriage and at the time the action is 
commenced. 
(5) The earning capacity of the party seeking 
maintenance . . . . 
(6) 
The 
feasibility that the party seeking 
maintenance can become self-supporting at a standard 
of living reasonably comparable to that enjoyed during 
the marriage, and, if so, the length of time necessary 
to achieve this goal. 
(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. 
No. 
2005AP1588   
 
38 
 
(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 to a 
reasonable conclusion consistent with applicable law.  LaRocque, 
139 Wis. 2d at 27.  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.  The court examined the length 
of the Steinmanns' marriage, 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.   
No. 
2005AP1588   
 
39 
 
¶79 The court also addressed Tony's ability 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 
is 
measured 
by 
the 
parties' 
lifestyles 
immediately before the divorce and which they would keep 
enjoying had they stayed married.  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.  She does not accuse the 
No. 
2005AP1588   
 
40 
 
court of either failing to consider the Wis. 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 Rose means to implicitly invoke Wis. Stat. 
§ 767.26(8), the provision of the maintenance statute that 
addresses marital property agreements.  If so, she does 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.  This subsection of the maintenance statute 
plainly 
applies 
only 
to 
those 
marital 
agreements 
with 
maintenance provisions.  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. 
§ 767.26(8) 
concerning 
financial support arrangements.  For whatever reason, Rose did 
not do so.  A maintenance provision in the Agreement would have 
been an appropriate factor for the court to consider.  
No. 
2005AP1588   
 
41 
 
¶83 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' business use of a DSI company 
yacht and company airplane.  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."  There is nothing in the 
text of the statute requiring that such spouses first have 
contributed to the household or childrearing to a certain 
degree.  Nor does the statute condition a court's 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.  Moreover, while Rose's brief 
No. 
2005AP1588   
 
42 
 
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 The amount and duration of maintenance is within the 
circuit court's discretion, and is to be measured "by the 
lifestyle that the parties enjoyed in the years 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-by-
case individual determination.  Hubert v. Hubert, 159 Wis. 2d 
803, 819, 465 N.W.2d 252 (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 it previously held that ten years was a short-term 
marriage; (2) that Tony could not enjoy a comparable lifestyle 
on 
his income, where it had previously found he could 
No. 
2005AP1588   
 
43 
 
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 
evidence 
not 
previously 
available. 
 
Most 
significantly, the court explained the change in maintenance 
requirements as resulting from changes in 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.  The circuit court determined that maintenance in the 
amount 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.  The circuit court 
also noted that while the maintenance award reduced Rose's 
annual income to $116,000, she enjoyed many 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.   
No. 
2005AP1588   
 
44 
 
¶89 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.  The 
Agreement is silent on the maintenance issue, which, if 
anything, weighs in favor of granting a maintenance award.  
Because 
Rose 
has 
failed 
to 
establish 
that 
the 
court's 
maintenance 
award 
constituted 
an 
erroneous 
exercise 
of 
discretion, 
we 
defer 
to 
the 
circuit 
court's 
maintenance 
determination in this case. 
V 
¶90 We conclude that the circuit court's property division 
and maintenance awards were not erroneous.  We 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 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 re-
apportionment of tax liability after the IRS determination is 
complete. 
   
No. 
2005AP1588   
 
 
 
1