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How are executive bonuses handled in a New Jersey divorce?

On Behalf of | Jan 30, 2025 | DIVORCE - High-Asset Divorce |

Dividing assets in a divorce gets complicated when executive bonuses become part of the equation. These bonuses take different forms, including cash payments, stock options, or deferred compensation. New Jersey courts treat them as marital assets if earned during the marriage.

Do executive bonuses count as marital property?

New Jersey follows equitable distribution laws, meaning courts divide assets fairly, not necessarily equally. If an executive earns a bonus during the marriage, the court includes it in the asset division. Judges examine when the employer granted the bonus, whether it rewarded past work, and if it came as a guaranteed or discretionary payment.

How do courts decide on division?

Judges analyze several factors before dividing an executive bonus. They review the length of the marriage, each spouse’s financial situation, and contributions to the household. If an executive receives a performance-based bonus after separation, the court determines whether the individual earned it during the marriage or after the divorce.

Can future bonuses become part of the settlement?

When executives receive bonuses regularly, courts may address them in a settlement or support order. Some agreements include provisions for sharing future bonuses, especially when they make up a large portion of income. If a bonus depends on unpredictable factors, the court may exclude it from the initial division and reassess later.

How can you protect executive bonuses?

A prenuptial or postnuptial agreement helps safeguard executive bonuses in a divorce. Keeping clear records of when and how bonuses are awarded also strengthens a case. If a bonus depends on future work, courts may classify it as separate property instead of a marital asset.

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