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How compensation structure affects divorce

On Behalf of | Aug 21, 2019 | High-asset Divorce

The type of compensation structure spouses have can have a big impact on decisions during a divorce. Each party needs to consider things like bonuses, stock options, commission, and other unique forms of compensation. For couples in Illinois who just have straightforward salaries with no bonuses, asset division is likely to be relatively simple. They don’t have to worry much about the timing of a divorce filing affecting total assets.

Prepaid bonuses with a claw-back provision can be particularly challenging to deal with in a divorce. This is a bonus that’s paid at the beginning of an employment term that can be reduced or withdrawn in the employee quits or doesn’t meet certain performance marks. If this bonus is divided during a divorce, it should be clear in the agreement that a spouse must be ready to give their part of the bonus back if the claw-back is enforced.

When it comes to commissions, divorce is all about timing. The spouse earning the commission may want to make sure their divorce is filed before finishing a deal that brings in a large commission. When the non-commissioned spouse is aware of a situation like this, they may have the opposite strategy. Timing can also be crucial when one spouse gets a new job that can involve signing bonuses or future vesting rights.

In any high-asset divorce, it may be a good idea for both parties to have legal representation from an attorney. When one spouse suspects that the other may be hiding one or more sources of income, a lawyer might help investigate the issue to ensure the fair division of assets. An attorney is also responsible for keeping up to date with all laws that affect the division of assets and any relevant taxes.

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