Law Offices of Steven A. Dinneen

X

*Limitations on Free Consultation- Free consultations are limited to one initial consultation per person. The Firm cannot guarantee it will consult with every possible client or evaluate every potential client’s matter. The consultation shall last no longer than 30 minutes and enable the Firm to understand the nature of a potential client’s matter and to inform the potential client if the Firm will consider representing the potential client in connection with the matter.

Stock options are potential assets in your divorce settlement

Property division and asset evaluation in divorce can be difficult, especially when the assets are stock options and restricted stock units (RSUs). These assets are speculative and do not have a fixed value. However, if you live in the state of California, you are more than likely entitled to at least part of either their current or future worth.

What makes stock options so challenging to divide?

A stock option refers to the right to buy a certain number of shares in a company at a fixed price for a certain number of years. RSUs, on the other hand, are actual shares of stock in a company that are issued to an employee through a vesting plan delineating a period during which an individual can’t sell, hence the term restricted.

During negotiations, your spouse’s lawyer may try to claim that his or her client’s stock options are, in fact, options, not tangible assets, or that his or her RSUs are worthless because the vesting period isn’t over. Technically speaking, those aren’t false statements, but they aren’t accurate assessments by the same token.

The critical factor is the amount of overlap between your marriage and your spouse’s stock options purchasing window or RSU vesting period. There is a good chance a judge will determine this overlapping time frame to be marital property, in which case California’s community property laws entitle you to half the value of that designated portion of your spouse’s stock options and RSUs.

Always seek the best advice

When navigating divorce settlements, it’s essential is to have a lawyer who’s experienced in property division and asset evaluation in divorce. An attorney will make sure even ambiguous assets, like stock options and RSUs, factor into your settlement.