Is my spouse entitled to share my bonuses if we divorce?

divorce and money

Is my spouse entitled to share my bonuses if we divorce?

Many companies offer a bonus scheme to their employees; the financial sums received under these schemes by employees range enormously. For some, the bonuses they can receive are significant, and in some circumstances they can double their salary for the year. How will these bonuses be treated if a couple divorce? Partner Fiona Wood offers her advice.

Matrimonial assets

Bonuses that are acquired whilst the couple are together are usually considered matrimonial assets. This is the case if the bonus is received after separation but is for a financial period whilst the couple were together. In this scenario the bonus received will be put into the “matrimonial pot”, along with all the other matrimonial assets that are to be divided between the couple, either by agreement between them or if there is no agreement, as ordered by a judge.

If one spouse receives a bonus that relates to a period of work undertaken after the couple separated, this money will not automatically be ring-fenced and remain with the spouse who earned it. The parties’ financial needs have to be considered first when looking at what is a fair settlement. Unless there are significant matrimonial assets, a judge will not be able to ignore the bonus when looking at how the matrimonial assets should be divided, when considering the issue of need. Need is usually having money to enable you to buy somewhere suitable to live and money to meet your living expenses.

Bonuses earned in the future

What about bonuses earned in the future? Once the appropriate division of assets and pensions has been undertaken, you have to also consider whether it is appropriate for one spouse to pay spousal maintenance to the other spouse going forward. If spousal maintenance is not needed, as both spouses earn enough to meet their income needs, a clean break order will be made, preventing either spouse from making any financial claims against the other in the future. All bonuses received after the clean break will remain with the spouse who has earned them.

Whilst the law says that there should be a financial clean break between a couple if this is possible, in many cases one spouse cannot manage financially without spousal maintenance from the other going forward. In this scenario the amount paid as maintenance will depend upon the income that both spouses receive, taking into account their earing capacities, any other sources of income that they both have, and their reasonable income needs. If one spouse regularly receives large bonuses, a judge will not ignore these and can, if considered appropriate to meet reasonable need, order that a percentage of any net bonus received be paid to the other spouse, in addition to monthly payments, as part of the spousal maintenance payments.

It is worth noting that the Court of Appeal in the case of Waggott v Waggott [2018] stated that an earning capacity is not an asset that is capable of being shared on divorce. Therefore, one spouse is not entitled to half of the other’s income, even when an equal division of the assets and pensions are considered appropriate on divorce. Spousal maintenance should be calculated on a needs basis rather than on a sharing basis.

Child maintenance

With regard to child maintenance, this is governed by the Child Maintenance Service, whose calculation will take into account the payer’s previous year’s income when calculating the appropriate amount of child maintenance that should be paid. Bonus payments received will therefore be taken into account when calculating child maintenance. This can cause problems for some people who receive large bonuses some years but not in others. In this scenario they will have to be reassessed each year that their income changes, if they have not managed to agree the amount of child maintenance payable directly with their former spouse.

If you are concerned about the financial settlement that your will receive if you divorce,  please get in touch today. We are here to help you.

Does adultery make a difference to your divorce settlement?

adultery and divorce

Does adultery make a difference to your divorce settlement?

Sometimes a client comes into our offices, extremely upset as their marriage has broken down because their other half has found someone else and wants to start their life afresh with them. Sometimes that new client wants “revenge” and sees the possibility of punishing, financially, their soon-to-be-ex-spouse through the ensuing divorce.

By and large the court is not interested in why the marriage is ending

In fact, one of the most common assumptions around divorce is that there will be a financial impact if one partner has had an affair and left the marriage as a result. But this rarely makes any difference to the overall division of assets, because when it comes to money, by and large the court is not interested in why the marriage is ending, but rather what resources each party has available, and how they are to be divided fairly.

Does adultery count against me during my divorce?

No, it doesn’t.  It is one of the myths around divorce that the unfaithful party should be treated more harshly, but a marriage breaks down for many reasons and is rarely attributable only to one person’s actions.  There may be multiple problems already present in the relationship which has led one party to commit adultery, and judges understand this. In the eyes of the Court, determining how the matrimonial assets should be divided is based entirely on fairness.

In practice, this means that should you commit adultery and this is the cause of the irretrievable breakdown of the marriage, you are unlikely to receive a less favourable financial outcome because of this, nor will the person who did not commit adultery achieve a more favourable one.

The Court is under a duty to consider all the circumstances of the case and in particular the Section 25 Factors, and apply these to the facts of the particular case. The starting point when it comes to division of assets is 50/50 and the court is able to apply an element of discretion as to the award.  No two cases are identical.

The courts are not there to judge you and your marriage

It’s also worth bearing in mind that adultery in and of itself is not quite enough from a legal perspective to sue for divorce. If you want to divorce your spouse on the grounds of adultery, you must also state that you find it “intolerable” to continue living with your spouse.  Ask yourself if the adultery is the sole reason for that situation. It may only be the last, the very final, stage in the collapse of the marriage.

Finally, here’s something worth bearing in mind.  There is a six month time limit from finding out about the adultery – wait any longer than that to petition for divorce, and the family courts will take it as read that you didn’t find the adultery intolerable at all.  And despite television programmes and films encouraging us all to think you have to obtain proof of adultery and be able to name the other person, you don’t.  If your spouse won’t admit the adultery, then you can proceed on the basis of unreasonable behaviour instead.

Remember: no matter how betrayed, or how guilty, you feel, infidelity is not against the law and the courts are not there to judge you and your marriage.  They are there to try and reach as fair an outcome as possible and to ensure the welfare of any children you have with your soon-to-be-ex.  It’s different if truly appalling behaviour has taken place – domestic violence for example – but thankfully such extremes do not affect most divorcing couples.

If you are affected by any of the issues outlined here, please get in touch today. We are here to help.

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