You work hard for your money, and if you're employed by a public agency or a private company that allows employees to accrue sick and/or vacation leave, then the paid leave you accrue over time will eventually be converted to a cash payment when you retire.
So that cash, if you divorce, will be considered a shared asset and will need to be divided with your spouse.
Let's say you're the type of person who doesn't need to take vacations and who never gets sick. If you work for the County of Sonoma or the City of Santa Rosa for 30 years, when you retire you will not only have your retirement pay to look forward to but also a cash payment of your accrued sick and vacation leave.
That is unless you divorce.
In 2011, the courts in California ruled that if an asset is convertible to cash, then it's an asset that must bedivided during your dissolution.
If a portion or all of it can't be cashed out and it has no economic value to the employee, then it won't be considered a shared asset.
The Struggle in Colorado Over Paid Leave
Colorado recently struggled with this same issue.
The case the court considered was called In re Marriage of Cardona and Castro. Marta Doris Castro and her husband Felipe Cardona co-petitioned for divorce in May 2007. In August 2009, the court divided the husband's accrued and unused vacation and sick leave as marital property.
Felipe's accrued leave had been reflected in his most recent pay stub, but it had not attached any cash value to it. During the proceedings, the wife's attorney didn't introduce any evidence that proved the cash value of the accrued leave.
A year after the hearing, Marta requested that the court award her half of the husband's leave, which she valued at $23,232. The court ordered the husband to pay Marta $11,616.
The husband appealed, arguing that the accrued leave wasn't marital property. A divided panel of the court of appeals agreed with him and drew the analogy of the unpaid leave to unvested stock options.
The court concluded that there was too much uncertainty associated with the value and existence of the leave time. Because the husband had no right to be paid for his sick and vacation days without retiring or being terminated from his job, this time could not be considered divisible property unlike other forms of deferred compensations like stock options and pensions plans.
State Supreme Court Steps In
Marta then appealed the case to the state Supreme Court.
The Supreme Court ultimately decided that "where a spouse has an enforceable right to be paid for accrued vacation or sick leave, as established by an employment agreement or policy, such accrued leave earned during the marriage is marital property. However, where a court can't reasonably ascertain the value of such leave at the time of the dissolution, the court should consider a spouse's right to such leave as an economic circumstance of the parties when equitably dividing the marital estate."
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