In re Marriage of Turner - Year-End Bonus In Divorce

In the case of In re Turner, the Colorado Court of Appeals decided that a spouse’s potential year-end bonus was not property because the right to the bonus was not contractually enforceable at the time of the permanent orders hearing. Here whether wife would receive a bonus and in what amount was to be determined about 6 weeks after the final orders hearing.

Income can be a contentious issue during divorce, particularly when it fluctuates. This is often true of bonus income. Bonus income may be an entitlement tied to certain performance or it may be discretionary with an employer. Bonuses also may fluctuate. Bonuses are relevant in divorce because some portion of the bonus interest may have been accrued during the marriage, thus could be considered a marital interest.

Here, the Court of Appeals determined that if the bonus right is not contractually enforceable, a potential bonus payable post-decree is not a marital property right. Trial courts at times previously had placed weight on the employee’s bonus-earning history in determining whether it was a marital interest.

Employment-related incentives can be a complicated matter in divorce. An employee may have bonuses, stock options, deferred compensation, employer retirement plan matching and more. Sometimes the incentives are considered to be income or property, depending on their nature. While some income is simple and clear, such as that shown on an employee W-2, determination of some income is discretionary with the court. Employee incentives may fall into the discretionary category.

In this case, wife was eligible for two types of employer bonuses Under the first plan, payment depended on (1) the company achieving specified goals, (2) the employee achieving specified goals, (3) employer discretion, and (4) CEO discretion. Wife had received variable bonuses in nine out of ten past years. For the second bonus plan, (1) Wife had to be an employee at the time of any award (2) the bonus was subject to cancellation, and (3) committee discretion.

Husband had pointed out wife’s history of bonus receipt and that while the bonus amount was uncertain, the bonus should be considered marital property because of the history of receipt. However, The trial court found relevant the lack of an enforceable right to a bonus and the Court of Appeals affirmed the analysis.

A knowledgeable and experienced attorney from a divorce and family law firm can guide you through Colorado Springs divorce and family law matters by negotiating, mediating and litigating. This allows you to focus on moving forward to a better future rather than on spending your time trying to figure out the overly complex court system. Colorado Springs Divorce and family law matters are difficult to navigate alone.

The court system is more complex than it should be. Change can be stressful, however it can lead to a better future. Sabra Janko from Janko Family Law Solutions is a knowledgeable and experienced divorce and family law attorney who protects your best interests and ensures that you are aware of your legal rights and obligations.

Contact our divorce and family law firm at 719-344-5523 or complete our online form to set up a free thirty-minute informational consultation.