An often overlooked asset that should be legally divided in a divorce settlement is the company or employer bonus. Many attorneys forget to address the community nature of such bonuses. Even if they are paid in the year following divorce, company bonuses are partially community property. Bonuses are paid for the preceding year’s services or performance.
The settlement agreement or divorce decree should state at least a 50/50 division of the community portion of the “bonus – if and when received.”
For instance, if the divorce is final on 9/30/18, but the bonus is paid in February of 2019; 3/4 of that bonus is community and should be shared with the ex-spouse. This is based on the fact that for nine months of 2018 the couple was married, and for three months unmarried. So, 1/2 of 3/4 of the bonus is community property and should be submitted to the non-employee spouse. This refers to the after-tax bonus.
Be sure that the ex-spouse is specifically required in the divorce decree to provide you with a copy of the check-stub showing receipt of the bonus, or provides you with another document from his employer that verifies the amount of his bonus.
One of my clients was awarded 28 percent of her husband’s bonus to be paid in March of the following year. He sent her a check, saying “here is your share.” He did not provide any accounting verification of the amount, or even a copy of his pay-stub showing the total amount of the bonus paid to him. She will never really know if the sum sent to her was fair. She determined it wasn’t worth the cost of retaining an attorney to make sure she got what was legally her portion of the bonus.
Ensuring that you don’t forget a bonus when crunching the numbers of your divorce settlement is just an example of what can be easily overlooked; one small piece of the larger puzzle of divorce finances. There are many dimensions to the financial side of divorce. Each couple’s case is unique. If there are expensive collectibles to be divided, a family business involved, multiple properties to evaluate, several investment accounts to be considered, a divorce can get complicated very quickly.
When couples are going through divorce, there are many emotions flowing in all directions, many issues to consider and myriad details to keep track of, including your concerns for your children and the major life change that lies ahead for your whole family. Making sure each spouse gets an equitable division of the marital estate involves lots of moving parts. Some of which you may not even be aware of. This is why I encourage clients to retain a Certified Divorce Financial Analyst such as myself to help navigate divorce finances. Many attorneys are simply not qualified to know all the financial ins and outs of divorce. After all, their training primarily focuses on divorce law and legal procedures.
Another very important aspect to consider is how you divide marital assets to best serve you and your family over the long term. This part of my service has become extremely valuable to my clients. Call me today with any questions and to schedule a consultation with me on your financial divorce situation at 832-858-0099.