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Family Law

Division of Corporate & Executive Benefits

There are a multitude of corporate and executive benefits which a spouse may receive if employed by a corporate entity, over and above that spouse’s regular W-2 wages.  It is important in a divorce situation that all such corporate execute benefits are identified and properly valued, especially since these executive benefits can sometimes be the most significant assets of the marriage.  Some of the types of benefits which may be present if one of the spouses is employed by a corporation or is an executive, are:

  • Stock, Stock Options and Restricted Stock: Often, in addition to receiving a salary, an employee or executive will receive stock awards.  Sometimes these awards are simply shares of actual, regular stock.  But sometimes these awards may be in the form of stock options or restricted stock.  This can make the division of the stock more complicated, as the stock may have a vesting schedule, or it may have restrictions on the division of sale of the stock.  And these things will also impact the value of the stock, as well as whether the stock is a marital asset or not, if the vesting schedule is going to continue after the divorce action was filed.  Our lawyers understand the complexities of these types of stock assets, and how to determine whether they are marital, and how to divide them appropriately if they are marital.
  • Pensions/401ks: Pensions and 401ks are subject to division in the divorce if they arose during the marriage, or even if they only partially arose during the marriage.  The other spouse is generally entitled to 50% of the portion of the pension of 401k that arose during the marriage.  In order to divide such an asset a special order is often required, called a Qualified Domestic Relations Order (“QDRO”), which has to be entered by the Court and then approved by the plan administrator.  If the pension is the type that will pay a set amount to the spouse at the time of retirement, then the other spouse will generally be entitled to receive his/her share of the payment at the same time the other spouse begins receiving it.  If the account is a 401k account, then the non-owner spouse may be able to receive his/her share of the 401k account as a roll-over into an IRA account, shortly after the divorce is final.
  • Medical or Health Savings Accounts: Medical or Health Savings Accounts are generally considered marital assets, as least up to the amount that was contributed during the marriage, and the amounts which have not already been used toward medical expenses.  If such an account exists, it is important to determine if it is marital, the balance, and the rules which apply to the account as promulgated by the plan by which the account is governed.
  • Management Incentive Plans and Performance Incentive Plans: These plans, and similar plans, are often used by employers to increase performance, reduce turnover, boost morale and loyalty, improve employee wellness, and increase retention.  If such a plan is present in your case, a determination will have to be made as to the exact nature of the plan, the compensation provided in the plan, whether it is intended to reward past performance, or to encourage future performance, or both.  All of these issues will be considered by a Court in determining if the asset is marital or non-marital or partially both.
  • Deferred Compensation Plans: These plans often allow an employee to set aside a portion of his/her income to be paid at a future date.  Sometimes the benefits mature tax-deferred until they are paid over to the employee.  Technically, such a qualified plan is not a retirement plan, but employees often use the plan as a retirement savings account, as it can sometimes be rolled over into an IRA.  Whether or not the plan at issue is a tax-deferred plan, the marital portion of it will likely be divisible as a marital asset, although the non-owner spouse may not be able to obtain his/her share until such time as it is paid to the employee.

Contact us now for consultation to see how we can help with the division of executive/retirement assets.

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