Best way to handle bonuses and variable comp


#1

My ex and I have calculated child support based on my salary which doesn’t vary week to week. I also receive variable comp at the end of each year in the form of a performance bonus (20% annually). Additionally when I was hired I was given RSUs and options which vest equally over the next three years (one time award).

How should I handle variable comp? Her attorney is suggesting a flat % but to me that seems one sided in her favor. I would think a true up each year would be more fair and reasonable.

I understand the RSUs, as they vest, would be counted as income and would be part of a true up. What about options? It would seem they would only come into play if I choose to exercise them in a given year, correct?


#2

Irregular, non-recurring, or one-time basis income can be dealt with one of two ways per the NC Child Support Guidelines: (1) the irregular income can be averaged or prorated throughout the year or (2) the payor of child support can pay a percentage of the irregular income that is equivalent to the percentage of his/her recurring income paid for child support.

Stock options would not likely be counted as income unless you exercised them.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.


#3

What I don’t understand is which numbers would be used to calculate the percentage of recurring income paid for child support? On worksheet B would it be line 14 RECOMMENDED CHILD SUPPORT ORDER divided by line 1 MONTHLY GROSS INCOME. Or would it be line 13 MONTHLY GROSS INCOME divided by MONTLY GROSS INCOME. Or lastly, would it be line 6 . EACH PARENT’S PORTION OF SHARED CUSTODY SUPPORT OBLIGATION divided by MONTHLY GROSS INCOME?


#4

You would use the percentage listed for you in line 3, “percentage share of income.” You can also negotiate a different percentage.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.


#5

So if I have 70% and she has 30%, I would owe her 70% of my bonus or would I owe based on her 30%?


#6

Line 3 is percentage of shared income. Wouldn’t it be line 5, which seems to be my amount of the child support obligation? Line 5 divided by my monthly gross?


#7

Your line 3 percentage is roughly how much of the total child support obligation you are responsible for (without considering health insurance costs, work-related childcare costs, extraordinary expenses, and the amount of time with each parent).

If you are attempting to enter into a child support order by consent, then you can negotiate on what that percentage will be. Perhaps you only offer 10% or 25%. However, it is more typical to prorate/average your irregular income to determine a set monthly gross amount rather than to pay the other parent a percentage of your gross bonus or commission every time you receive such a bonus or commission.


Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

Rosen Online | Unlimited confidential access to a North Carolina attorney for $199/mo - click here

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.