How are bonuses treated after divorce action?
We recently received a ruling, which determined that an annual bonus is marital property subject to equitable distribution, even though the bonus was received after the commencement of the divorce action. We represented a wife whose husband usually received an annual bonus of several hundred thousand dollars in March of each year. We argued that the year-end bonus represented compensation for work performed during the prior year, during a time period when the parties were still married. The Court awarded the wife fifty (50%) percent of the net value of the bonus (after taxes) since the husband was responsible to pay all of the income taxes owed on the bonus. We engaged a certified public accountant to calculate the correct income tax rate that was owed on the bonus. The Court ruled that if the parties had only been married for half of the year, then the wife would only share in fifty (50%) percent of the bonus.