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Do I split stock options during divorce?

Business leaders and managers go through divorces just like anyone else. However, due to the presence of complex, significant compensation packages, the process has the potential to become more complicated. Managing both expectations and outcomes would require a detailed look at the material facts of your case.

There are, however, some common issues that come up in these high-asset divorces. Please continue reading for a brief example of what you could expect from the process in terms of stock options.

Compensation in competitive, technical industries, such as aerospace, often involves various types of incentive packages. If this applies to you, it is possible that your employers specifically noted the purpose for each line item in your pay. If not, this may have been mentioned during your interview process — meaning you could have written evidence in the form of an email.

Although it is not always relevant, the purpose of each item in your compensation package could be important, especially if you began working at your current position before you got married. As explained by the Judicial Council of California, each member of your marriage would be entitled to half of the community property, which would likely include all assets earned while the marriage was in effect.

Imagine, for example, that you received stock options solely as an incentive to take a position. Then, you got married. The court might determine that you had already earned the right to exercise the stock options before the marriage began, and that the options were your separate property. On the other hand, if the package was offered as a retention or performance incentive, then the court might consider at least part of the eventual sale price of the vested options as part of the community property, ordering division.

Every situation is different, so it is important to have a competent team of advisors work with you when determining how and what to share. As such, please do not regard this as specific legal advice. It is only background information.



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