During a divorce, there are marital assets that can complicate property division. Divorces can become contentious while dividing many common assets, such as the marital home or bank accounts. However, soon-to-be ex-spouses should be mindful about complex assets, which can further complicate a divorce and can potentially be overlooked.
One of the assets that can complicate property division is stock options and restricted stocks. Unlike other sources of income, stock-based compensation is not readily available in a spouse's financial records or documents. To help determine if a spouse owns stock options and/or restricted stocks, the spouse's human resources department can be subpoenaed. The subpoena will allow the HR department to disclose information about benefit plans.
It is difficult to assess the value of compensation packages and other benefit plans. Unlike ordinary shares of stocks, stock options and restricted stocks have unknown future values, which are not guaranteed. The value of the compensation or whether such assets are part of the marital property varies state-by-state and can be based on when the stocks are vested. The spouses may need the help of a financial expert to determine the value of those stocks.
Once the value of the stocks is determined, each spouse must ensure that they have a fair share through negotiation or through the court. The spouses should also plan on when they will have the stocks converted to cash and consider the tax implications of doing so. Many experts suggest doing so immediately to avoid any losses.
Complex asset division can result in a complicated divorce. It is very important to have the right information about options in order to settle any divorce concerns because it can have huge financial implications for divorcing couples.
Source: Forbes, "Dividing Stock Options And Restricted Stock In Divorce," Jeff Landers, March 19, 2014