WHAT HAPPENS TO YOUR UPCOMING BONUS WHEN YOU FILE FOR DIVORCE?

When one party initiates a divorce, there is often confusion (and disagreement) about financial issues. Among them is who is entitled to any upcoming bonuses. It’s very common for families to run up credit cards with the expectation that someone’s big bonus that they get every year will pay it off. Or they use it for their annual Disney vacation. Or they had plans to make home improvements. Whatever the case may be for you, don’t make any assumptions either way about whether the bonus is yours or you have to share. Here is a brief explanation of how it works, but as with most things, there are exceptions. And with divorce settlements, sometimes people just agree to do something entirely different in their settlement. It’s all part of a puzzle that is a global settlement. You can’t just agree to thinks in a piecemeal fashion.

The general rule is that any property (including income) that is acquired during the marriage is in the marital pot and subject to distribution between the parties. The marriage is generally defined as the date of the marriage to the date a Complaint for Divorce is filed. There are some exceptions (such as inheritance), but this is where you should start. Also, be mindful that “acquired” doesn’t always mean when you actually received it. For instance, with respect to bonuses, just because the bonus check is dated after the Complaint for Divorce, that doesn’t automatically make it off limits. If the bonus represents compensation for past performance, if the past performance was during the marriage, then the bonus is subject to distribution. However, if it’s incentive for future performance, then the argument can be made that it is exempt from distribution.

As you can see, there is not a hard and fast rule on this issue. It requires an analysis of your particular facts and circumstances. If you need help figuring out what will happen to your bonus (or your spouse’s bonus), we can help. Call us to schedule a Client Vision Meeting or you can schedule one right here.

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