During a divorce, the division of assets can become a complicated and sometimes ugly thing. An important but frequently overlooked asset to discuss in this situation is stock options. Stock options refer to the spouse’s employer offering them the right to purchase stock in the future at a set price. The employee comes into ownership of the stocks over a vesting period. New Jersey is an equitable distribution state, meaning all assets garnered during a marriage are subject to equitable distribution between spouses. It can be difficult to determine which stock options qualify as marital property and can therefore be included in a divorce settlement. Contact a Union County Divorce Attorney to help you navigate the process to ensure the most seamless settlement possible.
Are My Stock Options Considered Marital Property?
Several factors contribute to determining whether or not a stock option given to one spouse becomes marital property or separate property. Stock options offered during a marriage do not always become marital assets. However, there are cases in which they do become marital property and should be divided as such.
If an employee was given earned stocks before the separation, they would be considered marital property. Earned stocks are granted to an employee as compensation for previous or current work and services.
Vested stocks would be considered marital property if the employee received them as an incentive for future work, and if the options were vested before or during the marriage.
Simply, if the stock option is granted in relation to services performed before the separation, they are considered marital. If the option is granted after the separation as an incentive for future work, it would be considered separate property.
What Are My Division Options?
It is important to remember that New Jersey is an equitable distribution state. This means that property and assets are not necessarily split down the middle and divided evenly. Assets will need to be divided in a way that is fair to both parties and provides fair compensation to both spouses.
Each divorce settlement is unique and there are a variety of ways to divide assets that may work for your individual situation. In the event of one spouse receiving the types of stock options from employees talked about above, here are a few ways to divide the assets:
- Offer the spouse other assets equaling the value of what their share would be in the stock options
- If there are vested stock options, liquidate them and distribute the monetary value to the other spouse
- Deferred distribution, where the non-employee spouse will receive their share of the stocks if/when the stock options are exercised
- See if the employer is willing to transfer a portion of the stock options into the other spouse’s name
There are many creative ways to divide assets. Using an experienced divorce attorney will allow you to find the best solution for your circumstances.
