There are many cases in which a large company provides compensation packages that include more than a traditional salary. Sometimes, they may offer restricted stock units (RSUs) in order to promote good performance overtime. This compensation is not received immediately, but over the course of time. It is because of this that when a person who has an RSU is going through a divorce, they wonder if the asset can be divided in the proceedings.. Continue reading below to learn more and contact an experienced New Jersey divorce attorney for help with your case.
How are RSUs Divided in a Divorce?
The New Jersey Appellate court recently ruled in a case that established how assets such as RSUs should be handled in divorce proceedings. The case worked to determine whether stock options granted during a marriage, but not exercisable until after the divorce, can be divided in a divorce. The ruling stated that the “future performance” of an RSU is not considered marital property, therefore it would not be subject to equitable distribution. This is because most of the award would not be fully vested until after the marriage was over.
However, the Appellate court did establish situations in which stock options could be divided, including if:
- It has been made during the marriage and vests prior to the date of the divorce complaint
- It is made during the marriage for work performed during the marriage, but becomes vested after the date of the divorce complaint
- It is made during the marriage, but vests following the date of the divorce complaint. This is unless there is a material dispute of fact regarding the stock, either in whole or in part, that the RSUs were given in consideration of the future performance of the employee
How Can I Protect my RSUs?
Stock options should be protected in a divorce. It is because of this that it can be beneficial to retain the services of a skilled attorney who can help prepare the individual for the proceedings. This can begin with gathering the following documentation:
- Testimony of you and your employer
- A copy of your stock plan
- Correspondence and additional documentation related to the stock award
- Vesting schedule
- Stock plan statements
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