IN many professions, bonus is a material part of a professional’s compensation. It is often a challenge characterizing bonuses in the context of a divorce case especially if the bonus has not yet been received by the employee spouse as of the date of separation. Marriage of Finby involved a wife who worked as a financial advisor. Marriage of Finby, 222 Cal. App. 4th 977 (2013). The wife developed a list of clients she referred to as her “book of business.” Before the couple separated, the financial advisor wife accepted a position of Wells Fargo Bank as a financial advisor. Part of the compensation was several types of bonus. One bonus was a transitional bonus contingent on the wife staying with Wells Fargo for 112 months and maintaining a certain production level. The offer also included a deferred recruitment award bonus and two production bonuses. The trial court ruled that the wife’s transitional bonus received before separation was community property but the rest was the wife’s separate property because they were not paid until after separation.
The court of appeal reversed, holding that the wife’s right to retain a contingent portion of a bonus for bringing her “book of business” over to Wells Fargo was community property. The court of appeal further held that the partially earned production bonus was also partly community property. The court noted that the book of business was acquired during the marriage and that it gave the wife the ability to induce the clients to follow her to the new firm just like goodwill in a business of other professions such as doctors and lawyers. In addition, it has been well established even in other jurisdictions that customer lists of licensed professionals who are employed in a business or industry is divisible marital property. The fact that the bonus of the financial advisor wife was contingent did not preclude it from being a divisible community asset because they were conditions that were under the employee spouse’s control. Marriage of Fonstein, 17 Cal. 3d 738 (1976), Marriage of Brown , 15 Cal 3d 838 (1976). The employee spouse’s right to receive the bonus arose when she accepted the employment offer. It is therefore important to look at the nature of spouse’s bonus in characterizing whether it is community property or separate even if the bonus was not received by the employee spouse prior to the date of sepration.
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Attorney Kenneth Ursua Reyes is a Certified Family Law Specialist. He was President of the Philippine American Bar Association. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. He has extensive CPA experience prior to law practice. LAW OFFICES OF KENNETH REYES, P.C. is located at 3699 Wilshire Blvd., Suite 747, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail [email protected] or visit our website at Kenreyeslaw.com.
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Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does create any attorney client relationship between you and the Law Offices of Kenneth U. Reyes, P.C. This article is not a solicitation.
