Is a Discretionary Bonus accrued during the marriage but issued after the Judgment for Dissolution of Marriage marital property?

November 6th, 2014 by Tiffany Hughes

In a recent case In re Marriage of Wendt, that came down from the First District Appellate Court on August 16, 2013, the answer is no. The Appellate Court held that a nonvested discretionary bonus accrued during the marriage, but received after entry of a judgment for dissolution of marriage, is NOT marital property. The parties filed for divorce in July 2010. Scott Wendt, a software developer for Citadel, received a considerable bonus payment for 2008, but was not paid out until early 2009. Scott received no bonus for 2009, however, received a bonus for 2010 that was payable in 2011. Additionally, he received a bonus for 2011 that payable in early 2012. In September 2012, the trial court entered a judgment for Dissolution of Marriage, including entering a Martial Settlement Agreement. Additionally, the trial court entered an order awarding Scott’s 2012 bonus payable in early 2013 to Scott after a finding that it was Scotts non marital property. Allison appealed the decision to the Illinois Appellate Court. The Illinois Appellate Court affirmed the trial courts decision and held that Scott’s 2012 bonus was non marital property.

So why was this bonus not considered marital property? The issue turned on the fact that the bonuses that Scott Wendt received were not guaranteed, and were not spelled out in an employment contract as a contractual benefit. Rather, the bonuses were purely discretionary and analogous to accrued vacation and sick time, which the Court has identified as non marital property because of its speculative nature. The Appellate court distinguished Scott’s bonuses from nonvested pensions, stating that employees have a contractual rights to a nonvested pension under an employment agreement. Whereas, Scott’s agreement with Citadel provided that all bonuses were discretionary and depended on factors other than Scott’s performance, such as the overall performance of the company. Additionally, even though Scott received bonuses for 2008, 2010, 2011, and 2012, Scott did not receive a bonus for 2009 and contributed the lack of such bonus due to the overall performance of the Company, which was a factor out of Scott’s control.

It you have questions about what is marital versus nonmarital property, give the Law Office of Tiffany Hughes a call today at 773-893-0228.