Employee stock options and restricted stock units (RSU’s) are assets that may be subject to the division of marital property in a divorce.
Many companies offer employees stock options that will vest after an employee is with the company for a defined number of years, often in hopes of retaining the employee for longer durations. Every situation is unique, but assets such as stock options and RSU’s can be a substantial asset in a divorce.
Dividing stock options and RSU’s can be tricky as the value can change over time, with the value of stocks determined at the time an employee exercises his or her options and cashes out or when RSU’s vest.
There are two common ways that stock options and restricted stock units are divided in a divorce: a spouse can provide cash or other assets for the current value or, a spouse may decide to receive their portion of the assets when their ex-spouse exercises the options or the restricted stock units vest.
As an example, if, during the marriage a company offers options that mature in 5 years and a couple divorces after two, a common way to divide the asset is to consider a 2/5ths of the option be shared as marital property payable in cash or assets immediately or at a future date as part of a divorce settlement.
Keep in mind that if a spouse elects to take cash or other assets in exchange for the current value of options or RSU’s, they may miss out on potential gains, but certainly they may also experience a loss if the stocks decrease in value over time.
Many spouses do not know what employment benefit compensation their spouse has. When you are considering divorce, it is important to determine if your spouse has received stock, stock options, or restricted stock units from their employer to ensure that those assets are divided as part of a divorce settlement. Working with Ronald L. Bell, an experienced divorce certified financial litigator, will help you receive your full fair share of marital assets. Contact Ronald L. Bell at 847-495-6000 to schedule your strategy session today.