Under community property statutes, spouses must generally divide the resources they acquired during marriage. They can either negotiate with one another or litigate in family court. Assets owned jointly and even property in the name of one spouse purchased with marital income could be subject to division.
Spouses generally need to conduct a thorough assessment of their finances and resources to ensure that they fairly split their property. If either spouse has a well-paid job, they may have a contract that provides deferred compensation.
Is deferred compensation divisible in a California divorce?
Income earned during marriage is marital property
Deferred compensation involves an arrangement to pay a worker for keeping their job or meeting certain performance metrics in the future. Deferred compensation can range from retention bonuses if professionals stay in their positions for a certain number of years to stock options.
Typically, the courts consider anything earned during marriage subject to division, even if the spouses have not necessarily received those assets yet. It may be necessary to determine the portion of deferred compensation earned during the marriage.
Depending on the type of compensation provided, valuing it could prove challenging. Even though spouses may not be able to directly divide compensation not yet received, they can use its value to make the overall property division process fairer.
Understanding which assets are subject to community property division statutes is helpful in the early stages of divorce. Even resources held in the name of one spouse could be subject to division under community property rules. Having support when addressing complex property division matters can help a divorcing spouse protect their financial future.