Skelly v. Skelly, ___Mich App___ (2009), #287127, 12/29/09
Domestic Relations ReviewPlaintiff husband filed for divorce following a 25 year marriage. The defendant wife filed a counter complaint and requested spousal support. At the time of the divorce, the husband was employed by Ford Motor Company and in 2007 earned some $289,000 which included a performance bonus and the first installment of a retention bonus totaling $108,000. The retention bonus was an incentive for plaintiff to remain with the company. If the husband remained employed with Ford on May 31, 2008 and May 31, 2009 he would receive the second and third installments of that retention bonus. If he was no longer employed by Ford on May 31, 2009 he would need to re-pay all the retention bonus monies. At the time of the divorce, the wife was unemployed outside the home.
As part of the judgment, the court ordered that the first two installments of the retention bonus be equally divided between the parties. The trial court concluded that the third installment was separate property since it would be paid after the judgment entered. However, the court also determined that the bonus was based on the husband’s work performance during the marriage. Given those considerations and the wife’s limited income, the court awarded 60% of the third installment to the husband and 40% to the wife. The court went on to award any of the husband’s future bonuses in the same manner—60% to the husband and 40% to the wife.
The husband appealed and argued that the court erred in determining the first two payments of the retention bonus were marital property and in deciding that the third payment was separate property subject to invasion. The Court of Appeals agreed with the husband and reversed the trial court. It concluded that in order to be characterized as marital property, property must be earned by a spouse during the marriage irrespective of when that property was received. Here, no portion of the retention bonus was earned during the marriage. Thus, none of it was part of the marital estate.
The facts were clear. In order for the husband to be entitled to any of the retention bonus, he must work to May 31, 2009. Although two of the installments were paid to the husband during the marriage, if the husband failed to satisfy the condition subsequent (to remain employed by Ford through May 31, 2009) he would be required to re-pay all the retention bonus monies received. Consequently, until he met those conditions the advances received during the marriage were contingent and not earned. Thus, none of the retention bonus money was marital property.
The trial court further erred in finding that the third installment to be paid after the judgment entered was separate property subject to invasion. Here, the husband did not take the retention bonus away from the marriage as his separate property because he had not yet earned it. Thus, that third installment should not have been considered separate property and, consequently, it was not subject to division by the trial court at all.
The Court of Appeals also opined that the trial court erred in awarding 40% of husband’s future bonuses to the wife. The issue of whether future bonus payments may be awarded as marital property is an issue of first impression with the Court. In Byington v. Byington, 224 Mich App 103 (1997) the Court held that “assets earned by a spouse during the marriage are properly considered part of the marital estate”. However, any future bonuses paid to the husband in this case were not earned during the marriage, and should not have been considered a part of the marital estate. Like the retention bonus, future speculative bonuses do not fit into either the category of marital or separate assets because they do not exist. They were not earned during the marriage and are based solely on the potential occurrence of future events unrelated to the marriage. Thus, the trial court erred in awarding the wife a 40% share in any future bonuses earned by the husband over the course of his prospective career.
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