Property division is frequently the most challenging aspect of divorce. Not every couple has children, but almost all married couples share some resources or debts. Negotiating an equitable or fair way to split property and resolve financial obligations is often a difficult task. People can become quite emotional at the prospect of losing certain resources, such as access to the marital home or their retirement savings.
Those in high-asset households often have much more contentious divorces because of the disagreements spouses may have about valuable marital assets. A high-earning professional, for example, may want to preserve as much of their personal wealth as possible. Their complex holdings and employment arrangements can exacerbate property division challenges. If one spouse’s compensation package includes stock options, addressing those stock options during divorce could very well be a difficult matter for the spouses involved.
What are the stock options worth?
Establishing the value of stock options or the right to purchase stock based on meeting terms in an employment contract is difficult. If a company has already had its IPO and has publicly listed stock, there will be a current value for the organization’s stock to use as a point of reference. However, particularly when the stock options are a form of deferred compensation or performance-based compensation, workers may not know how much stock they will receive or what it will be worth in the future. Therefore, it can be very difficult to put a price tag on stock options when negotiating property division terms in a Georgia divorce.
How much is marital property?
Given that the terms that allow someone to receive stock options are often part of a deferred compensation agreement, they may continue accruing more after the courts finalize their divorce. It is therefore likely necessary to establish how much of the potential stock would be part of the marital estate and how much would become the separate property of the spouse with an option to purchase stock as a benefit of their employment.
Just because someone cannot currently utilize their stock options at the time of a divorce does not mean that they can exclude such a valuable resource from the inventory of marital property. Understanding what factors can make certain assets more difficult to divide may help spouses to set sound expectations and craft their property division strategies accordingly.