Protecting What Matters Most

What happens with deferred compensation in a New York divorce?

On Behalf of | Apr 9, 2022 | High Asset Divorce

Unless you and your spouse signed a marital agreement or settle your property division matters outside of court, almost all of your shared property and income from throughout your marriage is at risk when you divorce. New York’s equitable distribution law requires that the courts split everything fairly.

Divorcing spouses often fixate on their most valuable assets, like investment and retirement accounts or real estate. Other assets may be ignored in the process. If you don’t report or claim all of the property you share with your spouse, you could end up deprived of your fair share of the marital estate.

Deferred compensation is frequently an asset that couples overlook when planning a divorce. Although your spouse may not have received that compensation yet, it could be part of your marital estate.

What matters is when someone earned the income

It’s easy to understand why people don’t think about dividing deferred compensation. It is income that one spouse will receive later, possibly several years after the divorce. Typically, deferred compensation is part of an employment agreement.

An employee may need to stay with the company for several years or reach other employment benchmarks before they receive their deferred compensation. While their employer may not pay them for their work for another year or two, at least a portion of that deferred compensation was from during your marriage. You may be able to claim it, although you may have to add a financial professional to your divorce team to put an appropriate price on deferred compensation, like stock options. Looking at property that can complicate high-asset New York divorces can help you plan for the future.

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