How Your Particular Compensation Structure Changes Your Divorce Settlement

 As attorneys who assist clients with divorce and property division here in Florida, we talk a lot about the importance of asset division. However, it is important to realize that your compensation structure has a direct effect on your divorce and divorce settlement. Unless your compensation structure is a straightforward salary – without any variance or bonus year after year – your negotiations are likely to be very different depending upon the compensation structure, as we discuss below.

Bonuses

If you receive a bonus with what’s known as a clawback provision that means that this bonus is subject to being paid back to your employer if you don’t meet certain criteria, such as performance criteria, or staying with the company a certain amount of time, etc. While there is an argument to be made that this bonus should not be considered to be a marital asset and subject to division because it could be withdrawn, make sure that, if your spouse is provided with some of this bonus, there are conditions very clearly provided for in your settlement which describe under what circumstances the spouse may have to pay it back.

And if you receive a regular bonus for the year’s work, make sure that it is not double-counted anywhere in terms of being included in your total income and separately.

Commissions

If you were paid a commission, you may want to time your divorce depending upon when that commission is paid out, as you may be able to argue that it is not technically earned until it is paid and is therefore should be considered separate property not subject to division.

Stock Options

Stock options can get complex, as portions are typically considered to be marital assets, but equitable distribution does not necessarily translate into a 50-50 split. The formula for dividing stock options can become complex, and timing can sometimes depend upon when certain interests are vested; for example, if some options are future-based, then they may not be considered to be marital at all.  As a result, agreements addressing stock options often include what is known as a “present value payout” or “if, as, and when distributions.”

Other Factors: Contact Our Florida Family Law Attorney

If you change jobs during the divorce and the compensation structure is different, this can cause some conflict in your divorce. You and your attorney will have to engage in negotiations, depending on the conditions of the asset.  Also know that if your job includes any perks, for example, if housing is included as part of your income, this will likely be considered to be a marital asset subject to division. Finally, if you dictate your own salary, know that the court is going to look at what you made each year and not at the amount that you made right before you file for divorce.

If you have any questions related to divorce here in Florida, contact our experienced West Palm Beach divorce attorney at the office of William Wallshein, P.A. today to find out how we can help.

Resource:

forbes.com/sites/frawleypollock/2019/08/13/how-your-compensation-structure-can-affect-your-divorce/#54120ea41ace