There is More to a Bonus Than Meets the Eye

For anyone still fortunate enough to receive them this is often the time of year when bonuses are paid.

But what if the person due to get the bonus has separated from their spouse but is not divorced?

Unfortunately bonuses can be a source of problems for two main reasons in a situation like this.

The first problem can arise when there is or is likely to be an ongoing maintenance payment to the other party.  The second problem is where bonuses have been earned over a lengthy period.  If the parties have been apart for a while there might be a dispute as to whether the bonus is a matrimonial asset at all.

As often happens in family law the answer is not clear cut.  One judge has said that once a marriage ends the partnership is over and the spouse cannot expect to receive a share unless they need it or are entitled to compensation.  In other words every case is different so there is no ‘right’ answer.

What the court will look at is whether the spouse has been given enough capital to meet (usually) her needs.  If they haven’t and there is ongoing maintenance to be paid bonuses may well be taken into account as part of the other party’s income.

There has been a case where the judge felt that approach might not be fair and made an order where the wife was only entitled to a share of the husband’s bonuses for three years.  She got one- third share during the year immediately following separation, one-sixth the following year and one-twelfth the year after.  However this approach has not been adopted by judges in other cases so is unusual.

In another case a judge ordered a straightforward 20% share to the wife.

What is clear now is the correct approach is to look at needs alone rather than an entitlement to sharing at whatever percentage so there is a ‘cap’ on the amount of maintenance.  In a recent case the judge set a cap of £20,000 a year on a £25,000 share of the husband’s bonus and pointed out that as the bonus was paid in the form of stocks and cash she would have to take her share from both elements so was open to the risk of the stock going down in value.

The second problem of how to deal with bonuses earned after a long separation is even less certain.  Some judges have stated that if the bonus is earned more than twelve months after separation they are not part of the ‘matrimonial pot’.  Others have felt they are and have divided them accordingly.

Basically there is absolutely no consistency whatsoever so it is vital to get advice on your specific circumstances.

Beecham Peacock solicitors in Newcastle can advise on all aspects of matrimonial finance.  Call us on 0191 2323048 or email us on enquiries@beechampeacock.co.uk