The way you bring in an income can have a significant impact on the way your divorce works and how you divide your assets. Someone with a consistent salary and no bonuses may have a straightforward description of their earnings. Someone who earns on commission may not be sure how much to say they earn since it may vary from month to month.
If you have an upcoming bonus, that is something that could end up being divided during your divorce. What happens to that bonus and if you’re able to shield this asset from the divorce will depend on a few different factors.
Prepaid bonuses
The first thing to think about is what kind of bonus you’re getting. For example, if you got a large bonus at the beginning of the year but those could be subject to a clawback, then you may end up repaying a portion if you don’t meet the company’s performance criteria. Until that period has passed, the bonus could be hard to divide. Even if you do divide it, your ex-spouse may have to return a portion if you lose it at no fault of your own.
Commission bonuses
Commissions are treated like bonuses because they happen only when you close deals or meet certain standards. If you file for divorce in November but had commissions pending from September, your spouse might argue that they deserve a portion of the commissioned earnings, which is something to keep in mind.
Bonuses for last year
If your bonuses are run on a yearly cycle, your spouse may be entitled to a portion even if it is paid out after your divorce. You may also be able to argue that you didn’t earn that money yet at the time of your divorce to try to keep the full amount.
These are a few issues that may arise with bonuses or commissions during your divorce. Keep any work bonuses or commissions in mind when you’re working on your property division process, so you know where you stand and what you can do to minimize the loss of money during divorce.