Many divorcing couples worry about retaining certain assets and maintaining a comfortable standard of living after separating their lives. Professional success can become a complicating factor in many divorces. Spouses seeking to separate their lives may need to address complex financial matters and their shared parental responsibilities.
Property division can be a difficult matter for people to address when they divorce, especially if they have accumulated valuable property. Spouses often disagree about what property they need to divide or what arrangements are appropriate given their circumstances. A professional’s success can potentially complicate their upcoming property division matters.
Divorcing spouses may need to address valuable and complex assets. A professional in a well-compensated position may have resources that are difficult to divide. For example, their employment contract may extend stock options to them that could be worth quite a bit.
How can spouses address stock options extended as part of an employment contract when they divorce?
There are several details to assess
Those attempting to address stock options as part of the property division process have several key issues to consider. First, they need to review the employment contract to determine the terms that govern the stock options.
In many cases, the divorce may occur partway through the vesting period outlined in the employment contract. That means that only a portion of the employee’s stock options may be subject to division. Next, the spouses have to determine what those stock options might be worth. That can be a difficult process, especially if the company has not yet had its initial public offering (IPO).
Even companies that are currently publicly-traded organizations can see the value of their stock fluctuate substantially. Spouses may find themselves disagreeing on what value to assign to the stock that one spouse has earned the right to acquire during the marriage.
Finally, actually sharing the value of the stock option can be difficult. It may not be possible to actually share the stock with a spouse, as acquiring it may not be an option for several more years. Instead, it may be necessary to use other marital property or even marital debts to balance out the various forms of deferred compensation included in an employment contract.
Those facing complex, high-asset divorces often need help navigating unusual concerns, and that’s okay. Stock options can easily complicate divorce and make a methodical approach to the process necessary.
