Is a severance package subject to equitable distribution?
A pre-retirement benefit package received by a spouse after a divorce complaint was filed, but representing in whole or in part a deferred compensation for services provided during the course of the marriage, is subject to equitable distribution. The key question is whether the “benefit” represented deferred compensation based upon the spouses previous endeavors during the marriage. For example, severance pay may be determined by an employee’s skills during his/her employment at a company. This, then would be subject to equitable distribution because both parties would have contributed to the employed spouse success in his or her care. Severance pay may also be considered for past labor. Payment for vacation day may accrue during the marriage and it must also be considered under equitable distribution. Finally, commissions upon departure from a company are also considered deferred compensation for previous endeavors.
