Divorce-Linked Income: Some Core Considerations

by | Sep 23, 2019 | property division

The thoughts of most divorcing Illinois spouses naturally turn to income as they contemplate the dissolution process and related negotiations. All asset sources need to be identified and accurately valued, with so-called “marital property’ being fairly distributed between the parties.

This is often easier said than done, especially in divorces marked by a comparatively higher incomes and assets. Income sources in high-net-worth divorces tend to be both numerous and diverse.

On top of that, note a team of writers in a recent Forbes article, they are often treated in different ways by family courts. The characterization of each asset can be central to whether the asset is even divisible in divorce. Moreover, singular circumstances surrounding them can make a party’s decision concerning the filing date for a divorce a very important one.

Consider a paid commission, for example. A divorcing party slated to receive one might understandably want to file immediately for divorce, claiming that post-dissolution money received is separate income. The other spouse might argue, conversely, that the payment stemmed from work done prior to marriage termination and is thus divisible marital wealth.

Here’s another scenario. You start a new job during your divorce, with your employer matching various perks that you were receiving at your former workplace. Should the new compensation be tied back to the former income, with your spouse being able to make a claim against it? Or should it be construed simply as a signing bonus that is off limits to your divorcing partner?

Stock options, too, can engender a bit of complexity. “Timing and vesting issues are factored in,” note the Forbes writers. Those can be key determinants of whether income is deemed as presently existing (and thus divisible as marital property) or future-based and regarded as the employee spouse’s separate asset.

A key bottom line relative to divorce-linked income is that some compensation can be treated differently based on singular circumstances. Important factors include when it is deemed to have kicked in, whether it comes with restrictions or contingencies, and how a party times a divorce filing in relation to such considerations.

An established Illinois family law attorney with a deep grounding in asset-division matters relevant to high-income divorcing parties can provide further information.