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People who reach the apex of their careers often have compensation packages that include complicated financial mechanisms to support their retirement. When couples divorce, dividing these assets equitably can be challenging.
Our lawyers at the Riley Divorce & Family Law Firm have a deep understanding of complex financial matters. We could help you negotiate a fair property settlement that takes the value of your spouse’s complex retirement plan into account while minimizing tax liabilities.
Ontario law requires that you and your spouse equally share the wealth you generated during your marriage. Each spouse’s pension benefits and contributions to retirement funds, as well as the growth in these funds’ value during your marriage, must be included in your family property equalization process. Doing so is a relatively straightforward procedure, although there can be tax implications for the division of pensions.
Complications arise when you or your spouse have complex compensation packages. If you are a high-level executive or have another successful position, you may defer compensation for tax reasons and accept some of it in the form of stock options or preferred pricing in company stock.
Executive leaders, remunerated athletes, and other professionals often receive a substantial portion of their compensation through bonuses. These bonuses are typically not paid in cash in a lump sum, but most or all of them will vest at some point in the future.
In general, deferred compensation announced before your date of separation could be considered family property, even though it has not vested as of the separation date. The value of each spouse’s interest in any future payment can be the subject of negotiation between you and your partner.
Unvested stock options can represent a considerable reservoir of wealth, but they are not always considered part of the marital estate. When the intent of delayed vesting is to induce you to remain with a company, the asset might be considered personal to you. We could review your employment contract, stock option agreement, and any other document that sheds light on the parties’ intent to determine whether an option is properly considered family property.
When you or your spouse has a complex compensation arrangement, the rest of your finances may be equally complex. A Certified Financial Divorce Specialist, often called a financial neutral, can be a valuable member of your divorce team in these cases. They could untangle your and your spouse’s holdings, assess the impact the divorce may have on each party’s standard of living, and provide objective, evidence-based opinions that can drive negotiating strategies.
Financial neutrals often work on collaborative divorce teams, but they can also provide guidance to a single spouse. Combined with the knowledge of an experienced divorce lawyer, a financial neutral’s analysis could help you determine the short-term and long-term impact of retaining or relinquishing a specific asset.
Property division can be an arduous process if you and your spouse have substantial assets. Equalization is especially fraught when you have a financial plan that involves multiple complex retirement accounts and sources of future income.
Our lawyers at The Riley Divorce & Family Law Firm have the resources and experience to ensure that your property division arrangement in a divorce is fair. We are available twenty-four hours a day, seven days a week to respond to your inquiries (via the webchat), so contact us today.
Paul Riley Law Office
