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Is deferred compensation at risk in a North Carolina divorce?

On Behalf of | Nov 30, 2021 | High Asset Divorce

When you take a position with the company, sometimes your work is an investment. You might accept a lower-paying position with a startup company that offers you more advancement opportunities rather than continue grinding by in an established job elsewhere. 

One of the ways a business can reward workers for taking a chance on employment there is through the payment of deferred compensation. You may have a contractual agreement to receive a specific amount of money after the company or your employment reaches certain milestones. You could also potentially have stock options that are only valuable once the business has an IPO and begins to offer public stock. 

You are the one who took the risk by accepting a job with a new company. Will you need to share that deferred compensation with your ex when you divorce in North Carolina? 

When you earned it, not when they pay it, is what matters

In North Carolina, a judge will apply equitable distribution rules to your property. You and your spouse can’t reach a settlement outside of court, then a judge will divide all of your marital assets in accordance with state law. 

Income earned during your marriage, even if you have not received it yet, could potentially be part of your marital estate. Even if it is only in your name, deferred compensation earned during the marriage may be subject to division in your divorce. You may need to split these assets or just factor their value into the property division process. Although it can be somewhat difficult to value stock options, deferred compensation may be a more straightforward benefit to report when disclosing your assets to your spouse. 

Understanding what you have to share with your ex and what you can protect as your separate property is an important part of any high-asset divorce in North Carolina.

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