When divorcing spouses have income that includes commissions, bonuses, stock options and other income besides a straight salary, the division of assets can get complicated. Generally, if a spouse receives a bonus for accomplishments prior to the divorce filing, it’s treated as a marital asset just like the rest of their income earned during the marriage.
The Colorado Court of Appeals ruled differently earlier this year in one case involving a couple’s dispute over the wife’s annual bonus. In question was whether the bonus her company paid her as part of its incentive program for 2020 after the final divorce hearing in early 2021 was divisible as marital property.
Why the court determined the money wasn’t marital property
The woman’s husband argued that the bonus, which according to the court was “substantial,” was marital property because it was for work she did while they were still married. However, the appellate court ruled that even though she had received bonuses every year for a decade, she was not guaranteed a bonus every year. Further, a compensation executive with her employer testified that the amount of the bonus for 2020 hadn’t even been decided when she and her husband divorced.
The Court of Appeals, therefore, upheld a district court ruling in the case. The justice who wrote the opinion noted that if “the employee spouse and the employer were somehow in cahoots to obstruct the other spouse’s claim to the bonus, it may well conclude that the bonus was more than a mere expectancy. Because the district court here found the employer credible, however, we must conclude that the …wife did not yet have an enforceable right to the bonus” while she was still married.
Bonuses and payments shouldn’t be intentionally delayed to avoid division
Of course, every situation is different. Some spouses have been known to work with their employers or clients to postpone payments until after their divorce is final so they don’t have to share the money with their future ex-spouse. That can be legally problematic. It can also deny spouses money to which they’re entitled.
When you’re dealing with income that is anything more than a regular salary or wages (whether it’s yours or your spouse’s), it’s wise to have experienced legal and financial guidance. This can help you achieve a fair settlement.