Splitting Couple May Be Splitting Bonus, Too

Question: Last September my wife filed for divorce. Our children are all grown, so we are doing the paperwork ourselves. The divorce should be final next month. I am a real estate broker. Although last year I did not have a particularly good year as a real estate broker, our brokerage firm had an excellent year. All of the real estate brokers in the brokerage firm, including me, recently received a $12,000 year-end bonus. My wife says that she is entitled to 1/2 of this $12,000 year-end bonus, because we were married for most of 2019. Is my wife entitled to 1/2, or even any, of this $12,000 year-end bonus?

Answer: The general rule is that, after a petition for divorce is filed, any income earned by the spouse is the separate property of the respective spouse. An exception is compensation for services rendered during the marriage. [For example, if a lawyer on a 1/3 contingency fee basis has represented a personal injury client for several years, and there is a $300,000 settlement paid by the insurance company, with a contingency fee to the lawyer of $100,000, paid after the petition for divorce was filed, the lawyer’s spouse may be entitled to receive up to 1/2 of this $100,000.] Whether the $12,000 year-end bonus to you from your brokerage firm was compensation for services rendered to the brokerage firm, or was a “gift” to you from the brokerage firm, would depend upon the records of the brokerage firm and the testimony of the principals in the brokerage firm as to the reasons that you received the $12,000 year-end bonus.