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How you’re paid impacts your divorce

On Behalf of | Jul 30, 2020 | Divorce

Couples in the midst of divorce in New Jersey, Pennsylvania and other states may wonder whether how their income is paid will impact their divorce proceedings. Compensation structure refers to how parties in the divorce receive income from their employers. Bonuses, commissions, stock options, perks and other compensation may be considered as part of the marital assets.

One form of compensation is a prepaid bonus with possibility of repayment. If you accept a large bonus that is prepaid and subject to repayment if certain criteria are not met, this can potentially be excluded from the asset pool.

Bonuses paid for work already completed are likely to be considered a marital asset if the work was performed prior to the divorce being filed. Be wary, however: If the bonus is split with your spouse, it should not be counted in your overall income.

If you are paid on commissions as they occur and are facing a sizable payment from an upcoming deal, it may make sense to file for divorce prior to obtaining that large commission. If you change jobs during a divorce and your previous job included stock options and other types of compensation, it’s possible that your new company might provide you with a matching portfolio as part of your agreement to accept employment with them. This can be a problem as there could be arguments as to whether this represents a signing bonus, which your spouse is not entitled to, or assets that your spouse would have been entitled to had you stayed at your old job. Rules governing stock options vary by state, so you may want to consult with a local attorney.

If you receive perks such as a company car or housing allowance, these items will be up for discussion when it comes time to divorce. Unlike expense accounts, which are used solely for business purposes, these perks could be construed as part of the lifestyle that your spouse has come to expect.

Divorce is complicated, even between amicable parties. To get the most out of your settlement, you may wish to contact an attorney.