Does your spouse have a claim to your deferred stock options?

On Behalf of | Nov 21, 2022 | Complex Property Division |

California professionals working in high-demand occupations often have very complex compensation packages. Companies offer many benefits, including deferred stock options, to incentivize a long relationship with newly-acquired talent and to have them invested in the company’s growth.

As a married professional contemplating divorce, you probably already understand that community property laws will apply to your paychecks and also to your shared property, like your marital home. However, there may be other components of your employment compensation, such as deferred stock options or incentive stock, that seem like more of a gray area for property division purposes.

Does your spouse potentially have a right to request some of those as-of-yet unpaid forms of compensation?

Yes, deferred compensation may be divisible in a divorce

It is typically the date that you earn or acquire an asset that determines if it is vulnerable to claim by your spouse in divorce proceedings. You will have to review your employment contract carefully to determine what deferred compensation you will likely receive that you have already earned.

You may also have to negotiate an appropriate price for that deferred stock, as it will be nearly impossible to predict what the stock will be worth when you finally have vesting rights. Splitting deferred stock is more complicated than factoring it into other choices.

For many couples contemplating a complex property division process, it will be a more effective solution to agree on its value and how much of the deferred stock would be subject to division to use that value in other major decisions. Attempting to actually divide the stock would require ongoing communication between the spouses, possibly for years after the divorce.

Many married couples with complex income will have a faster solution to their economic separation from one another if they reach an agreement about how much of the stock would be subject to division and how much they want to state it is worth. The spouse who will receive the stock can retain full interest in it, and the other spouse can receive marital assets of comparable value. Other times, short-term spousal support can play a role in dividing such assets appropriately at the time of vesting.

Negotiating property division terms for marital estates involving complex assets can be a challenge that requires careful consideration in California divorces.

 

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