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Compensation plans can be complex in high-asset divorces

On Behalf of | Aug 19, 2019 | High Asset Divorce

High-asset divorces in North Carolina and around the country often involve spouses with complex compensation packages, which can add an extra layer of complexity to property division and alimony negotiations. Disputes can arise over whether income that is prepaid, deferred or subject to clawback provisions should be considered marital property or included when calculating income for alimony purposes, and people who do not pay attention to these matters may find that large amounts of money are either counted twice or not counted at all.

Clawback provisions can be an especially thorny issue as spouses may argue that income that could be withdrawn should not be divided. When these bonuses are included in high-asset divorces, the settlement may stipulate that the person who receives the money must pay it back if the clawback provision is triggered. However, a further stipulation could state that repayment will only be required if the clawback was not the result of a voluntary act such as resignation.

When high-income earners change jobs during a divorce, their new compensation packages often include substantial signing bonuses to compensate them for options or vesting rights they lost when they left their old employer. This can lead to acrimonious property division disputes. The person starting a new job may claim that a signing bonus is separate property and not subject to division, but the other party could argue that the bonus was only paid to make up for money that should have been divided but was not.

These are extremely complex issues and resolving them at the negotiating table may not always be possible due to the adversarial nature of spousal support and property division talks. In these situations, experienced family law attorneys may suggest exploring more cooperative approaches such as mediation.

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