Who Gets The Severance Pay In A Divorce?
Last updated on April 15, 2025
Severance pay in divorce refers to compensation provided by employers when terminating an employee’s position, which differs from regular salary or bonuses as it serves as financial support during career transitions.
At The Prince Law Group, LLC, our attorneys understand the complex nature of dividing assets like severance packages in divorce proceedings. We provide comprehensive guidance to clients navigating the difficult question of who retains severance pay when marriages end in Connecticut and New York.
Severance Pay As Marital Property
The treatment of severance pay in divorce varies significantly between Connecticut and New York, affecting how these assets are divided.
In Connecticut, severance pay is generally considered marital property subject to equitable distribution, regardless of when the right to receive it accrued. This means the court views severance as an asset acquired during the marriage that both spouses contributed to, even if indirectly.
New York takes a different approach. In Biddlecom v. Biddlecom (113 A.D. 2d 66), the court established that severance pay received after filing for divorce constitutes separate property. Similarly, Harrell v. Harrell clarified that severance benefits received before the cutoff date for identifying marital property are considered acquired during the marriage.
Protecting Your Severance Pay
There are several strategies to protect your severance pay in divorce proceedings:
- Payment classification: Clarify whether the payment compensates for past service or future earnings
- Financial planning: Consider the tax effects of different division strategies
- Asset negotiation: Discuss offsets with other assets in your divorce settlement
- Documentation: Maintain records of the purpose of the severance with employer communications
A well-drafted prenuptial or postnuptial agreement can specifically address severance pay in divorce and designate it as separate property, not subject to division. These agreements provide clarity and can prevent lengthy litigation over severance compensation when marriages end.
Contact Our Severance Pay Division Lawyers
We help clients throughout Connecticut and New York understand their rights regarding severance pay in the property division. Contact The Prince Law Group, LLC, in Stamford, Connecticut, at 203-653-8483 or in Westchester County, New York, at 914-930-2982. You can also reach us through our online contact form for a consultation.