California being a 50-50 state when it comes to property division in divorce, any eligible stock options would be divided half and half between you and your spouse. Unfortunately, you may encounter certain challenges when attempting to secure this type of division.
Applying this rule would take some effort in most cases. You may even need to change the forum of your divorce if you believe stock options would become an issue.
Stock options explained
One of your first challenges would be defining the stock options in terms of property type. As explained by the SEC, companies offer this type of employee benefit for a variety of reasons:
- To retain employees
- As a signing bonus
- For extra compensation — as a performance bonus, for example
This could have bearing on your divorce. For example, if your spouse received the stock options as a signing bonus, and if he or she began work before you were married, the stock options could be separate property.
Finding hidden assets
You may find that not everyone is completely truthful during the divorce process. Although it is unfortunate, there is a possibility that your spouse would not disclose the existence of stock options. If you do not divide these assets in your final agreement because you do not know about them, it could be difficult to gain access to them later.
For this reason, alternative dispute resolution may not result in as fair of a result as a litigated divorce would. During litigation, you would have more tools at your disposal to seek the true nature and amount of your spouse’s assets.