Rhode Island Supreme Court Upholds Post-Employment Compensation Split in Divorce

When a couple gets divorced, one of the first things the court needs to figure out is which property is marital property and which property is separate property. Typically, any property brought into the household during the marriage will be considered marital property. The biggest exceptions to this rule are when the property is given as a gift or bequest to only one of the spouses. Rhode Island is an equitable distribution state, which means that marital property is split “equitably” between the parties during a divorce. It’s important to have a basic understanding of these concepts because it is how the court decides which property is subject to division. Of course, laws can be complicated and only a qualified Rhode Island divorce attorney can give you a true sense of how a court is likely to split property between a couple.

Post-Employment Compensation

In the vast majority of cases, future earnings are not considered marital property and are thus not subject to division. However, this does not count compensation that was earned during the marriage which will be paid later. For example, if one spouse participates in a 401k employer match program, the money put into the account by both the employer and the spouse (including the interest that is earned) will usually be subject to division. However, any contributions by either the employee or employer (as well as the interest from those contributions) after the marriage ends will typically be the sole property of the employee spouse.

In this case, the husband worked for Wells Fargo when he started having problems at work. He was terminated around the same time that the divorce process was going on. As part of the termination agreement with Wells Fargo, the company ended up paying the husband $218,000. The settlement with Wells Fargo also included a one year nonsolicitation agreement. Not too long after this settlement, he started a new job with Equisales.

The dispute between the ex-spouses was as to whether the money from Wells Fargo was considered future compensation or was essentially “earned” through his employment with the company. In other words, the court focused on whether the money was his payment for agreeing not to compete for a year, or whether it was money that he earned during his employment. The answer to this question would determine if the Wells Fargo money was marital or separate property and whether his ex-spouse would be entitled to half.

Rhode Island Supreme Court Decision

Here, the Rhode Island Supreme court upheld the determination of the family court that the money was essentially “earned” during the marriage and was thus marital property subject to equitable distribution. The court’s reasoning relied on the fact that the husband was an at-will employee and thus was not entitled to severance pay, as there was no contract requiring it. Further, the appeals court was reluctant to disturb the trial court’s findings that the husband was not a credible witness.

Hire an Experienced Rhode Island Divorce Attorney to Represent You

If you are thinking about divorce and are curious about how your assets and accounts may be divided, you should talk to a knowledgeable Rhode Island divorce attorney. The attorneys at Bilodeau Capalbo, LLC can look at the specific circumstances of your case and advise you on the likely effects that a divorce will have on your financial picture. Email us using the form on this website or call (401) 300-4055 to set up your free consultation today.

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