Divorce proceedings — whose bonus is it anyway?

By Victoria Myerson

Writing out a cheque in settlement of an ex-spouse’s claim in divorce proceedings can be an unedifying experience at the best of times, ameliorated only by the certainty that it’s the last instalment. However, in cases where the capital assets are insufficient to permit the parties to go their separate financial ways, the court may consider it appropriate to make an order that provides for part of an ex-spouse’s ongoing maintenance to be paid from a percentage of the breadwinner’s future bonus payments.

Bonus payments in the finance and banking sectors are usually contingent not only upon market factors but also work-related performance. Consequently, it may seem inherently unfair that a proportion of such bonuses may be ordered to be paid to a former spouse who is no longer making any contribution to the home life of the breadwinner.

It is important to remember that the court will only take account of future bonus payments where there is insufficient capital in the ‘matrimonial pot’ for a ‘clean break’ to be ordered. A clean break divides the existing capital and ends further financial claims between former spouses. This is often the desired solution but where capital is more limited recourse may be had to future income to fund spousal maintenance payments by one party to the other either for a fixed term or during their joint lives (i.e. until one of them dies)…

Click on the link below to read the rest of the Appleby briefing. 

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