How Compensation Structure Can Affect Your Divorce

How your compensation is structured can actually help or hinder you during the divorce process. If your compensation is structured like a straight salary (without a performance-based bonus), negotiations tend to be much more forthright. However, if any part of your compensation comes from the following sources, you should be more prepared for your negotiations.

Prepaid bonus with clawback provision. Sometimes your employer pays you a large bonus at the beginning of your employment term with that company. If those funds are subject to clawback if you leave the company in a certain timeframe or if you don’t meet standards of performance, it can be argued that the bonus shouldn’t be considered as a divisible asset. This argument hinges on the possibility that those funds could be withdrawn and the potential of those funds could disappear from your asset pool.

If your divorce occurs while you are bound to this kind of agreement, make sure all parties know the circumstances and conditions in which the money would have to be given back.

Bonus checks for past work. If at any time during your divorce you are paid a bonus check for the previous year’s work, it will be considered a marital asset subject to division.

Commissions. If you are getting a divorce, and you or your spouse earns commissions, be aware that these are assets that will need to be revealed in the divorce and they will be considered a marital asset subject to division.

Perks. If you or your spouse has a company car, phone, or anything else that contributes to your lifestyle these are actually considered part of your income.

If you have questions about your finances in regard to divorce or are seeking to file for divorce, Shah & Kishore can help. We are dedicated to helping our clients achieve a smooth and peaceful separation.