Stock options often overlooked in divorce settlements

Stock options in collaborative divorceIn any divorce, including a collaborative divorce, all marital property and debt have to be divided. In an equitable division state, marital property and debt are to be divided in a just manner when considering all the statutory factors.

Stock options are often overlooked by many parties when dividing marital property and debt. Some parties might forget to include them on their financial statements inoccently. In other cases, a party might, unfortunately, fail to disclose them in hopes that the other party does not discover it.

In a collaborative divorce, it is vital that both parties act in an above-board manner. One way to do this is to inform the other party of all marital property and debt that exists.

This means that parties going through a collaborative divorce should check with their employer, if they do not know, about whether they have any stock options. Often, the best place to inquire is through the human resource and/or benefits department.

It also might mean the party who suspects that their spouse might have stock options ensures that the lawyer inquires about this in the collaborative process. In a collaborative divorce the parties need to be able to trust that their spouse will voluntarily disclose if stock options exist.

If stock options do exist, there are a few different ways in which these stock options can often be dealt with in a collaborative divorce. First, if possible, these stock options can be divided as the date of divorce in an equitable manner.

But in some cases, dividing the stock options as of the date of the divorce is not possible. This may be because the options are not vested yet. Some employer terms may also not allow stock options to go to a non-employee.

In these cases, there are really two options. One, the stock options may end up being divided later into the future once they vest. That said, the spouse who has the stock options might argue that since the option interest has not vested, they have not acquired them yet and, thus, they should be off the table.

Or, two, sometimes the stock options can be offset by other marital property and debt. But to do this, the financial neutral will need to have the value of the stock options properly valuated. Otherwise, a fair offset cannot be reached.

Valuating stock options can be somewhat complex. However, with the help of the financial neutral, a value can almost always be determined. If need be, the financial neutral can sometimes enlist an outside forensic account to valuate the stock options.

If you are going through a collaborative divorce where stock options exist, Stange Law Firm, PC can help. You can contact us at 855-805-0595.

Author: Kirk C. Stange, Esq.

Kirk Stange is a Founding Partner at Stange Law Firm, PC.

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