Dividing assets during divorce creates stress for most couples, but when your financial picture includes stock options and work benefits tied to company stock, things get extra tricky. After all, these valuable assets often represent a big chunk of your family’s financial future and security.
How courts handle different equity compensation
Colorado courts first determine whether your stock options count as shared marital property. Here’s how different stock types are usually treated:
- Vested stock options: These are options you can already use to buy company stock. If you received them while married, courts usually consider them shared property to divide.
- Unvested stock options: These require you to keep working at the company before you can use them. Courts might split only the portion you earned during marriage.
- Restricted Stock Units (RSUs): These company shares become yours over time. Courts typically divide only the portion that became available during your marriage.
- Employee Stock Purchase Plans (ESPPs): Money you put into these plans during marriage and any resulting shares count as shared property.
Like other marital assets, the courts aim for a fair division of your stock options or units instead of a 50/50 split.
Since stocks are generally non-transferable, you can choose to sell the stocks and divide the proceeds, split the investment shares, or buy out your spouse’s share of the stock options.
Smart tips to protect your interests
Taking proactive steps helps ensure fair treatment of your equity compensation:
- Gather all stock option grant documents and vesting schedules
- Consider hiring a financial expert who specializes in valuing complex equity compensation
- Discuss creative settlement options like trading other assets to keep your equity compensation
- Understand the tax implications before agreeing to any division plan
Taking these actions early in the divorce process helps create a smoother path forward and often leads to better solutions for everyone involved.
Move forward with confidence in your financial security
Stock options represent not just money but your hard work and future security. Working with an attorney who understands these special assets helps protect what you’ve earned. With proper legal guidance, you can work toward a fair settlement while minimizing conflicts that might disrupt your quality of life.