Factors ranging from household resources to employment arrangements can directly influence divorce proceedings. The Indiana divorce process necessitates a division of personal property and an intentional re-allocation of personal debts between the spouses. Spouses in higher-income marriages may have complex resources and assets that are not liquid, meaning they can’t divide them easily or directly.
A professional’s employment compensation package is an example of a non-liquid asset that could complicate a divorce. Individuals pursuing professional success often move into positions that offer complex compensation packages. In addition to a base salary and benefits, they may receive deferred compensation and incentive pay.
Deferred compensation can be valuable and can push someone to achieve certain professional goals. However, deferred compensation can be a real challenge to address in a complex divorce. What happens to deferred compensation someone has not yet received during divorce proceedings?
Some deferred compensation is subject to division
Deferred compensation can come in many forms. Companies may offer retention bonuses if someone stays with the company for a set amount of time or compensation based on either their professional performance as an individual or the growth of the company. Stock options and other forms of deferred compensation can significantly augment the base salary a company provides a worker.
For the purposes of litigating property division, spouses must establish how much of the deferred compensation one spouse may have earned during the marriage. Then, they may need to establish a reasonable value for the deferred compensation, which can be challenging.
Estimating the value of stock, for example, can be very difficult if someone won’t receive their stock options for two more years. Especially in cases where the company has not yet had its IPO, it can be very challenging to accurately estimate the appropriate value of deferred compensation. Deferred compensation earned during the marriage is much the same as any other income, other than the fact that the spouse has not received it yet. It can influence the division of other assets and marital debts.
Those with complex compensation packages may prefer to negotiate property division settlements without deferring to a judge so that they can protect certain resources when they divorce. Recognizing the unique challenges that may be inspired by high-demand careers when people divorce may help people as they prepare for the end of a marriage.