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Do you have to share your work bonus with your ex-spouse?

On Behalf of | Dec 19, 2023 | Divorce |

Divorcing couples often grapple with the division of assets, including income components such as bonuses. In states such as Connecticut and New York, the process of dividing marital property adds a layer of complexity to the separation of finances.

In the eyes of the law, the division of marital assets and debts must be fair, though not necessarily equal. This fairness standard applies unless a prenuptial or postnuptial agreement dictates otherwise. Notably, any income either spouse acquires during the marriage is usually marital property and subject to division during divorce proceedings.

The bonus conundrum

Bonuses, a common variable income component, present a unique challenge in divorce cases. Unlike fixed salaries, bonuses often depend on factors such as continued employment or meeting specific performance metrics. The treatment of bonuses hinges on the nature of the bonus and the timing of its receipt in relation to the divorce process.

Contractually guaranteed bonuses

About 40% of private workers have access to bonuses. If a bonus is contractually guaranteed, one spouse earned it during the marriage, even if received post-divorce finalization. In such cases, the bonus becomes subject to division between the divorcing spouses. This scenario is less common, as employment contracts typically do not explicitly promise bonuses.

Non-guaranteed bonuses and timing

For non-guaranteed bonuses, the handling varies based on the marital status at the time of receipt. If the spouses are still legally married when the bonus happens, it is generally subject to division. On the contrary, if the spouse gets the bonus after the divorce is final, it may not be marital property and may not require sharing.

Understanding these nuances is important for individuals navigating the complexities of divorce proceedings and striving for a fair division of assets.