Is All Compensation Treated the Same During Divorce?

As divorce attorneys who practice here in Florida, we regularly discuss asset division, however, there are a number of different types of income and, unless all of your compensation structure involves a regular salary that stays the same, strategy surrounding asset division is going to be different during divorce, depending on the type of income. For example, you may make a bonus, or a commission, or have stock options, etc.

Below, we discuss some of these different types of compensation and how you can be strategic about them during divorce:

Bonus With Clawback Provision

If you receive a bonus but it has what’s known as a clawback provision, that bonus is subject to being returned to your employer if certain events happen, such as you leaving the company early or failing to meet certain performance criteria. While you and your attorney may argue that this type of asset is not divisible in the first place because it’s conditional, if your spouse is granted a portion of this bonus under your divorce settlement, make sure that the conditions are included that may address what happens if it is taken back (i.e. in that circumstance, is your spouse going to need to pay back the portion of the funds that they received?)

Regular Bonus

If you are paid a ‘regular’ bonus for the year’s work, it is likely to be considered a marital asset that is subject to division because it is part of your income. However, make sure that it is not counted twice in terms of being included in your overall income and as a separate asset.

Commissions

If you make a commission, you may want to time your divorce depending upon when you receive this commission, as your spouse is likely to argue that it is marital property because it was earned while you are married, however, you may be able to argue that it is separate property if it is not paid out until after the divorce has commenced.

Stock Options

Stock options can become complex because even though at least a portion is considered to be marital property, splitting them isn’t necessarily based on a 50-50 and formula can become complicated, depending upon when interests become ‘vested’ (for example, if interests are future-based, they may not be considered marital property at all).  Divorce settlements often include a ‘present value payout’ or “if and when” distributions as a result.

Special Circumstances

If during the divorce you switch jobs and compensation changes, this can cause some conflict in your divorce and you will need to engage in negotiations to determine whether any new assets should be subject to division. In addition, if there are any perks that come with your job – such as housing included – this will likely be considered marital property subject to division. And keep in mind that if you determine your own compensation, the court will look at what you have regularly made each year, not what you made right before getting divorced.

Contact Our Florida Divorce Attorneys

If you live in Florida and have any questions about asset division during divorce, contact our experienced Orlando divorce attorneys at the Arwani Law Firm, PLLC today to find out how we can help.

Resource:

forbes.com/sites/frawleypollock/2019/08/13/how-your-compensation-structure-can-affect-your-divorce/#3d216bde1ace

https://www.arwanilawfirm.com/how-do-i-make-sure-my-finances-stay-intact-after-my-divorce/