Dividing Stock Options in a Marital Property Division Settlement

Many companies offer stock options or restricted stock as incentives to their higher-level employees. Stock options basically gives the employee an option to purchase company stock at rock bottom prices and cash it out later at the stock’s fair market value sometime in the future. If everything goes as planned, the employee will make a tidy profit off the difference.  Restricted stock differs in that company stock cannot be transferred from the company to the employee until certain conditions are met, which may include longevity with the company or hitting defined sales targets.

When a couple decides to divorce, what stock options and restricted stock are martial and non-marital property will have to be determined. It follows that options rewarding performance given prior to the marriage are non-marital and options rewarding performance during the marriage are marital property. Options intended to serve as incentive for future loyalty and performance may or may not be marital – working with an experienced marital property division lawyer is key.

Of course it is impossible to know the value of stock options or restricted stock until they are exercised. Therefore after determining what options are marital and non-marital, any marital stock options or restricted stock will be allocated between the parties at the time of judgement even though the values may not be known and the options themselves may not be divisible until a future date.

Generally, most stock options are non-transferrable so the court will leave the decisions to exercise an option to the discretion of the employee spouse. If an employee spouse refuses to exercise vested stock options in the future, the court can require the employee spouse to exercise the options at the election of the non-employee spouse.

Marital property consists of all income and assets acquired during the marriage. It may include retirement funds such as IRA’s, 401ks or pensions; there may be stocks, restricted stocks, deferred compensation or other equity; you may have brokerage accounts such as mutual funds, stocks, bonds; there may also be bank accounts with checking, savings, CDs and the like. When dividing complex financial assets, it is very important to seek the help of a knowledgeable complex divorce lawyer to reach a fair settlement.

Questions About Dividing Stock Options as Marital Property In Illinois?

Contact an Experienced High Asset Complex Divorce Attorney for Answers

Determining the full value of your marital assets can be a complex task. Attorney Ronald L. Bell has over three decades of experience handling complex and high asset divorces in Illinois and he will protect your interests in the short and long term. If you have questions regarding marital property division, contact the marital property division law offices of Ronald L. Bell & Associates for more information today at 847-495-6000.