Vacation And Sick Pay: Divisible Assets In A Divorce
It is generally known that assets such as real property and financial accounts are subject to division in a divorce. But what about accumulated vacation and sick leave? Employees depending on their benefits can accumulate hundreds, even thousands of hours of leave, and this vacation and sick time can be overlooked in a divorce. Unused vacation and sick leave that is payable to an employee in cash are also divisible assets and should be valued and included in property division in a divorce, just like other assets.
The requirements for vacation and sick leave to be considered property in a divorce are: 1) they are unused; 2) they are vested; and 3) they are mature. “Vested” means not subjected to forfeiture; the employee will not lose the accrued leave if unused. It must be payable to the employee if the leave is not taken. “Mature” means that the employee may retire at any time and upon retirement, they are entitled to payment for their unused and accumulated vacation and sick leave.
Generally, the value of vacation and sick leave for purposes of property division is the sum the employee will receive, less deductions for income taxes and social security. If the leave was earned or accrued during the marriage, it is community property. If it was earned or accrued before the marriage or after the date of separation, it is separate property. While the court cannot order an employer to pay the other spouse for the value of their interest in the benefits, the spouse entitled to payment for unused vacation and sick time can receive other property as compensation for their interest.
Our Family Law Group is experienced in valuing and handling all types of assets. Please contact us to schedule a consult, via email to JasmineB@beresfordlaw.com or call our office at (425) 776-4100. We continue to have full remote capabilities, and a virtual consult is also available if preferred.