Does My Spouse Get Part of My Bonus in Our Divorce Settlement?

 Posted on September 09, 2022 in Kane

Divorce is fraught with complex issues that must be addressed, and perhaps none more so than the issue of marital asset division. Once an Illinois couple’s relationship has irretrievably broken down, neither spouse rarely looks out for the other spouse’s well-being. Financial negotiations must be undertaken that are fundamentally zero-sum in nature; what one spouse gets in a divorce, the other spouse must necessarily lose. 

It is natural, therefore, for there to be an element of self-preservation in the asset division process. Spouses who are high-income earners are perhaps especially wary of being taken advantage of or losing hard-earned income. When it comes to commissions, bonuses, and other rewards for employee performance, individuals may be wondering whether they get to keep the fruits of their labor or if they must divide it with their spouse. 

Bonuses, Commissions, and Stock Options in Divorce

When it comes to determining whether performance-based compensation must be divided in a divorce, the answer, as with so many other grey areas of divorce, is “It depends.” Two things are primary determinants of whether performance-based pay is divided between spouses as marital income:

• Whether the performance-based pay is guaranteed in an employment contract or is conditional based on continued employment or performance
• Whether the performance-based pay was paid out before the divorce was finalized 

So, for example, if a company tells employees that excellent performance combined with continued employment on a certain date will allow (but not guarantee) a performance bonus, the employee will get to keep that bonus - if the divorce has already been finalized when the bonus is paid out. 

If an employment contract guarantees performance-based compensation, whether it is a bonus, a commission, or stock options, those payments are considered part of an employee’s income and are divided regardless of when the performance-based pay is paid out. In the matter of unexercised stock options, the asset division may be postponed for many years until the employee exercises his or her stock options. 

Other factors may complicate the division of performance-based pay, and it is important to speak with an experienced attorney who can help you aggressively negotiate a fair divorce settlement. 

Meet with an Experienced Team of St. Charles Divorce Attorneys

Anticipating how much of your financial portfolio will be available to you following a divorce is an important part of planning for life after your divorce is over. To get help managing your marital asset division and with every other part of the divorce process, schedule a comprehensive consultation with a skilled Kane County divorce attorney with MKFM Law. Contact us today at 630-665-7300.

Source: 

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000