§5.13 Severance Pay

Termination payments (or "severance pay") received under an employment agreement by a spouse employed during marriage but terminated after marriage are community property if they were vested during the marriage and were a form of deferred compensation for services rendered. [Marriage of Skaden (1977) 19 C3d 679, 687–688.]

The termination pay is separate property, however, if the right to the pay:

• Did not accrue during the marriage,
• Is based on an employer's offer after marriage, and
• Is intended as future replacement compensation for long-term employees pursuing new jobs or professions.

[Marriage of Lawson (1989) 208 CA3d 446, 453–454.]

Similarly, termination pay is separate property if the right to receive it is not based on employment during the marriage but on a new agreement after the marriage. [Marriage of Steinberger (2001) 91 CA4th 1449, 1458–1459.]