3 Things to Know About Divorce and Executive Compensation in New Jersey


3 Things to Know About Divorce and Executive Compensation in New Jersey

3 Things to Know About Divorce and Executive Compensation in New JerseyIndividuals who are considering divorce are often concerned about two particular aspects of the end of their marriage: the emotional burden and the financial situation. While the emotional aspect varies greatly from person to person and case to case, the divorce laws in New Jersey with regard to finances are fairly straightforward. Here are three things to know about executive compensation in New Jersey.

Both your salary and any bonuses or other compensation are considered in establishing support. It is common for executives to receive a base salary, but also a significant bonus or alternative compensation in excess of the base salary. These bonuses may not be guaranteed and may fluctuate from year to year. This may lead people to believe that this type of income is not considered in support calculations because it is not guaranteed and is not consistent. However, this is not true. In these types of cases, a bonus – in whatever amount – is routinely included in establishing support. This can be done in a number of ways: The parties can either agree that they will take an average of recent years’ total incomes to establish the level of income, or they may agree to a percentage share of the bonus that will be shared. For example, it’s common that people in this situation will agree that the party who is receiving alimony will receive an additional lump sum percentage of the other spouse’s bonus annually. Regardless of how it is ultimately established that this will be paid, all compensation received by the parties will be considered in establishing support.

Some of your benefits may not be divided at the time of divorce. One way in which companies may choose to compensate their employees includes issuing Restricted Stock Units, or RSUs. These stocks are issued by the company to an individual for their services, and come with a vesting schedule, which refers to the time that they become exercisable and can be sold. The existence of this type of benefit must be disclosed during a divorce. For individuals who receive RSUs, it’s likely that there remains some unvested or non-exercisable stocks at any given time. This may lead them to believe that these assets do not have to be shared. Not so. In this situation, the attorneys and the parties would need to determine what RSUs were issued between the date of marriage and the date of complaint for divorce, and those RSUs would remain subject to equitable distribution. The party who owns the RSUs would have an obligation, under the terms of a settlement, to sell their former spouse’s share of the stocks when they are directed to. They would then receive the funds and provide the former spouse with the net proceeds of the sale. Depending on when the shares vest and are able to be sold, the employed spouse may continue to have an ongoing obligation to do this for a number of years after the parties are divorced.

Ownership or an ownership interest in the business is subject to equitable distribution. If one party is an executive within a business and has an interest in the equity of that business, it may be necessary to value the business and establish that party’s level of interest. The parties will then need to decide how to divide that asset. In many situations, this will mean that the business will remain intact and the other spouse will be compensated either through a cash buyout, or perhaps by taking a larger percentage of another asset in order to make them whole.

If you have questions about executive compensation and divorce in New Jersey, contact the attorneys of DeTorres & DeGeorge to schedule a consultation.

Financial Divorce Guide
About DeTorres and DeGeorge Family Law

DeTorres and DeGeorge Family Law is a New Jersey based family law firm that has been helping New Jersey residents achieve the best possible results in their divorce for nearly 30 years. The DeTorres and DeGeorge Family Law team is always ready to fight for their clients’ rights – determined to help New Jersey families overcome legal challenges from start to finish. Our legal team, with over 65 years of combined experience, provides expert guidance on all family law and divorce-related matters, including custody and parenting time, alimony and child support, equitable distribution of assets, premarital agreements, post-divorce issues, executive compensation distribution, divorces for business owners, and divorce mediation. The firm has been recognized for its dedication and expertise in the industry by multiple local and national organizations, including Super Lawyers, Law Firm 500, and the American Institute of Family Law Attorneys. Rosanne DeTorres, Managing Partner, is one of 150 lawyers certified as a matrimonial law attorney.

Erin D. DeGeorge
Erin D. DeGeorge joined DeTorres & DeGeorge, LLC as partner to the firm in June of 2010. Prior to joining DeTorres & DeGeorge, Erin was associated with the national firm of Fox Rothschild LLP and Cutler, Simeone, Townsend, Tomaio & Newmark, LLC...
Share on:

knowledge & insights

Man standing behind a tree watching a couple

My Ex Keeps Stalking Me

Stalking has been defined as a course of conduct that is directed at one person that would cause a reasonable person to feel fear. Stalking is a pattern of  behavior consisting of individual acts. Those acts independently could seem harmless and often non-criminal in nature, but when considered in...

February 28, 2024 Read More

Man in military uniform removing ring

Is military divorce the same as regular divorce?

Military divorce couples file for divorce using the same process that civilians use; however, when military couples divorce there are factors that have to be considered separate from routine divorce situations. While there are many similarities among a military divorce and divorces involving...

February 21, 2024 Read More

Bird house hanging from tree branch.

What is bird nesting divorce?

A bird nesting divorce, also referred to as bird's nest custody, or bird nesting, is a living arrangement that allows for the children to continue to reside in the family home while the parties take turns living in the home. Bird nesting divorce is intended to keep the primary burden of the divorce...

February 13, 2024 Read More

Divorce: The Answers you Need – Before, During & After

Download our eBook today!

  • This field is for validation purposes and should be left unchanged.


  • This field is for validation purposes and should be left unchanged.

follow us