Is your divorce a sand trap for your future earnings?

Author: Marie E. Matyjaszek

You can’t believe how nasty your wife is getting in this divorce - she wants everything and then some! Can a mere dozen indiscretions while you traveled around the world as a pro golfer really be that big of a deal? You’re anticipating some heavy cash coming in from some of your sponsors and even though you won’t receive it until a few years after the divorce, she still wants a cut. Well, thanks to a recent decision by the Michigan Court of Appeals, your future bonuses are not considered part of the marital estate subject to division, so you can keep those to yourself. I wouldn’t recommend texting this news to your girlfriends though.

In the just-decided case Skelly v. Skelly, (December 29, 2009), the Michigan Court of Appeals reversed a Wayne County Circuit Court decision that awarded part of the husband’s future bonuses from his employer to his wife, to the tune of 40%. Tom was a successful employee of Ford Motor Company (who I’m sure dreamt of being pro golfer on the side) and his better half Patty was a homemaker. Because no one wants to work for an automobile company these days, Ford offered Tom a “retention bonus” which totaled $108,000 if he’d stay with the company through May of 2009. He got part of the payment in 2007 and was going to get the other installments in 2008 and 2009; however, if he decided to take his career strictly to the fairway and leave Ford before May of 2009, Tom had to pay the entire bonus package back.

The trial court ruled that these future bonuses were marital property, and the last bonus payment, while correctly considered separate property, was subject to invasion and awarded her 40% of all of it. If you’ve earned some money during your wedded bliss, it’s almost always going to be considered marital property, and you get to watch helplessly as she spends it at Victoria’s Secret. You’ll wonder why the children’s toys keep coming to your house in those cute pink bags, but there’s not much you can do about it. However, “speculative bonuses do not fit into either the category of marital assets, or separate assets, because they do not yet exist.” Tom had not yet earned these bonuses, and the time period for when they could potentially be earned was after the two were divorced, so they were not a marital asset.

The Court of Appeals ruled that the bonuses were not a separate asset either, as Tom “did not take his retention bonus away from the marriage because he had yet to earn it.” Separate assets can be subject to invasion in a divorce, if one party needs that extra support, or if the spouse had helped accumulate those separate assets. Luckily for Tom, this was not the case.

It’s good to know that the Court of Appeals is willing to let your ex stay in the past and not take part of your future, including your earnings. Patty’s ball may have landed in the rough, but the Court of Appeals granted Tom his mulligan.

First published 2/8/10, Jackson County Legal News, Vol. 45, No. 20