Employee Bonuses for Future Services
(Provided by National Legal Research Group, Inc.)

Most bonuses are consideration for a period of successful work effort before the bonus was awarded. But some bonus plans grant sums in consideration of future services. When these plans are present, consideration for future services is separate property to the extent that the services will be performed after the marriage.

In In re Marriage of Doherty, 103 Cal. App. 4th 895, 126 Cal. Rptr. 2d 919 (2d Dist. 2002), the wife’s employer offered her a relocation subsidy if she would accept employment in California. The subsidy took the form of a monthly subsidy paid to the holder of the mortgage on the marital home for the next 20 years. The subsidy ended if the wife left employment or moved away from California, and the employer retained the right to change or revoke the allowance. Two years into the 20-year period, the parties separated. The court held that the subsidy payments were consideration for the wife’s continued service in California, and not a contractual benefit acquired in exchange for the one-time act of relocating. Thus, subsidy payments payable after the date of classification were separate property. Since the wife lost the subsidy if she ceased working for the employer in California, the court’s conclusion that the benefits were consideration for 20 years of service there seems correct. See also O’Neal v. O’Neal, 55 Ark. App. 57, 929 S.W.2d 725 (1996) (husband received $35,000 forgivable loan on eve of divorce, with 25% of the total balance to be forgiven after each of the next four years; loan was compensation for postmarital services, and proceeds were separate property).

For the same reason, a future-oriented bonus awarded shortly after the marriage begins is marital property to the extent that the future services are performed during the marriage. See Aloisi v. Aloisi, 639 So. 2d 91 (Fla. 5th Dist. Ct. App. 1994) (husband received stock during the marriage as incentive to become chief executive officer of corporation; stock was consideration for present and future marital efforts, not a reward for prior efforts and experience, and was therefore marital property).

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National Legal Research Group, Inc.