Professionals with highly-compensated positions tend to make better wages and have more complicated employment arrangements than those in less-skilled and lower-compensated roles. They may have benefits packages that include insurance benefits and paid time off. Their employer may offer a pension or even directly contribute to retirement savings account on behalf of workers.
The employment benefits a worker commands can increase the overall worth of their employment compensation by roughly 30%. Work benefits can improve someone’s overall quality of life and augment their household budget.
When professionals with complex compensation packages start thinking about divorce, they will inevitably have some challenges when it comes to dividing their income and assets if they don’t have a pre-existing marital agreement. What are two of the property division challenges that professionals may face when they divorce?
Issues with retirement accounts and pensions
While a professional’s retirement account or pension will be in their name only, their spouse still has a partial interest in that asset. As professionals fund their retirement accounts with income they earned throughout their marriage, those deposits are likely subject to division in the divorce proceedings.
A spouse who never made direct contributions to the account might be able to ask the courts to divide it. While you can avoid early withdrawal penalties by using specialized paperwork approved by the courts, you will likely still have to diminish the overall value of your retirement savings.
Concerns about deferred compensation
Do you receive a performance-based bonus at the end of the year or have a contract that will grant you company stock after your sixth year with the company? Deferred compensation is a common way for companies to keep new professionals at their business for a specific amount of time or until they reach certain performance goals.
You may have to find a way to put a price tag on the future value of your deferred compensation and then factor those amounts into your property division negotiations. The percentage of compensation accrued during your marriage may be vulnerable to division even though you won’t actually receive that compensation for several years.
Identifying and addressing the property division issues that can complicate high-asset divorces will help you prepare for the upcoming end of your marriage.