Divorce is never easy. Even when it’s the best decision for you and your future, it can be a devastating, painful experience. Change is difficult. That can also be true for changes to your employment. But what happens if both occur at the same time?
Partners should understand how any changes in income can affect their financial future before finalizing a divorce. That’s because earnings are one of the most significant factors determining child support and spousal support or alimony.
Three job-related scenarios to consider
Pennsylvania has straightforward but different processes for calculating child support and spousal support or alimony. In both situations, the higher-earning spouse typically makes court-ordered payments to their lower-earning ex-partner. Here are three situations that can substantially affect both parties:
- Changing careers: Starting a new job can be risky during a divorce by adding stress to an already emotional time and potentially affecting future support payments. If the spouse paying support earns more money, the spouse receiving payments usually benefits as well. However, if the paying spouse’s income goes down, that doesn’t guarantee their support obligations will decrease.
- Losing your job: If a paying spouse involuntarily loses their job through no fault of their own – such as downsizing – reduced support payments are possible. However, courts often refuse to lessen support amounts if someone loses their job due to misconduct or performance issues. Also, severance packages are generally treated as income and included in support considerations.
- Bonuses and commissions: If a paying spouse expects to receive a year-end commission, bonus or other distribution after the divorce is finalized, courts may consider at least a portion of that income in support calculations. Judges generally look at whether the compensation was earned for work performed before proceedings began. Depending upon the timing, courts may include some or all of this compensation for calculating support payments. Bonuses, commissions and other deferred compensation may also be fairly and equitably divided under Pennsylvania property division rules.
Retirement creates its own issues
So-called gray divorces contain many complex issues for dividing property and determining support levels. When divorce and retirement happen at the same time, several considerations arise, such as:
- Is retirement mandatory or optional?
- Are you at least 59 ½ years old so you can collect retirement funds without penalty?
- Do you have a pension, and how is it distributed?
- Do you have minor children?
While retirement presents unique challenges during a divorce, any change in employment or earnings can significantly impact the financial future of both parties. That’s why it’s advisable to seek experienced legal advice before making these major life decisions at the same time.