Legal Question in Family Law in California

In California all assets and/or property earned and/or acquired during marriage are presumptively community property unless they are from an inheritance or bequest or they originate from a separate property source. Therefore some of the major issues regarding the characterization of severance pay will depend on when it is paid, what it is for, and possibly the date of separation. If the severance pay is for the employee's past employment and during that employment the employee was still in the marriage then at least part of it could be characterized as community property. However, if the severance pay is for the employee to find new employment or because of some negotiation not involving employment during marriage it could be characterized as separate property.

Therefore severance pay can be characterized as either community property or separate property. If your asking how severance pay will be used regarding spousal support payments again my thoughts are that it could be considered continued earnings and be taken into consideration when calculating support or it may not be used. It really will depend on the persuasiveness of your attorney and the argument used as to what a judge will do. Unfortunately, there are no black and white answers to give you and it is impossible to give you an accurate answer in this type of forum especially without knowing more important facts. I suggest you call an attorney and go over it. Most attorneys will give a free consultation or at least a very reduced rate for the first hour. Go in and ask those questions regarding your severance pay.

Good Luck,

Brian McGinity

McGinity is pretty far off base. There is case law that addresses this issue. There are two types of severance pay. One is effectively deferred contingent compensation, somewhat like a bonus. This type is almost always contractual and is in place during the employment. Most regular employees do not have this kind of guaranteed severance as part of their job offer, but those that do have acquired a community asset if it is earned during the marriage. The other type of severance is offered only at the end of the employement, either to avoid or settle a wrongful termination or simply out of fairness to laid off employees. That type of severance is to compensate for lost future earnings. Therefore it is treated as earnings when paid. If paid in a lump sum, it may even be treated as earned when it would have been earned for some purposes. What this means in divorce is that if the severance was contractual, and earned during the marriage, your ex is entitled to half. Depending on the dollars involved, that would give you grounds to reduce or terminate spousal support, depending on how the numbers crunch. If the payments are for lost future earnings, they will be treated as current income. In that case, you wouldn't have to pay any of it to the ex, but you would be treated as still having the income and therefore not entitled to a reduction in support payments until it runs out.