Should You Defer a Raise Until After a Divorce?

You may have heard that some spouses choose to defer raises, bonuses, and other employment benefits until after their divorce. But why exactly do spouses do this? What is the advantage of this, and should you be doing something similar? At the end of the day, it is only natural for spouses to strive for the best possible financial outcome as they go through a divorce. In some cases, this means putting their own interests above those of their spouses. Even if you are a high-net-worth individual who faces no real financial danger, it makes sense to approach your divorce in a strategic manner.

The best way to accomplish your divorce-related financial goals is to team up with a qualified divorce attorney in North Carolina. Our legal professionals can help you strive toward your specific goals and priorities, including targeted financial outcomes. When you work with one of our experienced divorce lawyers, you can explain your particular employment situation and how this might affect your divorce. We can then recommend the best course of action. 

If you are approaching divorce for the first time, you might think that your date of separation is just a random thing. However, this date is not meaningless, and it can have a tremendous impact on your divorce. The date of separation is used as a dividing line between marital and separate property in North Carolina. In other words, all assets accumulated by either spouse after the separation date are usually considered separate property. All assets accumulated during the marriage are considered marital property. 

This is why many spouses choose to defer bonuses, raises, and other employment benefits until after their separation date. They know that these additional assets will be considered separate property if they wait. Because of this, they will not have to divide these assets with their former spouse. Or so the theory goes. 

In reality, you may still be required to divide these additional assets with your spouse. This is because the court may determine that all income earned during the marriage is considered marital property. Since your bonus is a reflection of your work performance in previous months and years, you technically made it while you were still married. Therefore, the court may order you to divide your bonus with your former spouse. 

However, this logic may not apply to other employment benefits and assets, such as pay raises. It is really up to the court to decide whether or not these assets should be tied to a certain income period during the marriage or whether they should be considered separate property to which your ex has no claim.

Your raise or bonus may affect more than just property division. In some cases, a bonus or pay raise may affect how child support and alimony are calculated. As you probably know, alimony and child support payments are partly calculated based on how much income you are capable of earning. A pay raise increases your income and may also increase your monthly child support or alimony payments. Even bonuses may be counted as part of your income when calculating your child support obligations. This is another reason why many spouses choose to defer raises or bonuses until after the separation date has passed. 

As long as you are being honest and straightforward with your spouse about when the raise or bonus was offered, there is no law against deferring these employment benefits until after your separation date. Although your spouse might frown upon this, you can speak with your employer about deferring your bonuses and raises until the right moment. However, you will run into serious legal issues if you attempt to conceal your income in any way. Part of the divorce process involves sharing financial information with your spouse and their attorney. Failing to do so will damage your chances of a favorable legal outcome. 

If you have been searching the North Carolina area for a qualified, experienced divorce attorney, look no further than Arnold & Smith, PLLC. We have considerable experience with spouses with high net worths, and we understand your unique concerns when approaching property division and other divorce-related financial matters. Reach out today, and we can help you start working toward the best possible outcome as you end your marriage and move forward with your life.