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A divorce may involve stock option assets that require division

On Behalf of | Sep 2, 2021 | Divorce

A non-working spouse may not have a full picture of the complex financial assets associated with his or her marital union. A divorce may require an investigation to uncover assets that a working spouse accumulated; the findings could affect the amount of a financial settlement.

As reported by Kiplinger’s Personal Finance, executive compensation packages often include valuable performance incentives or tenure-related bonuses. In addition to a base salary, a company may offer incentives to entice executive employees to stay working in a key position. Long-term bonuses may come in the form of company equity.

How divorce may affect stock options

If an executive started working at a company while married, a divorce may require paying a nonworking spouse a fair portion of a stock bonus. In some cases, the shares may become available on a start date or shortly after an executive begins working.

Most companies, however, may not grant an employee the right to transfer, buy or sell bonus stocks until a predetermined future date. Based on the length of a marriage, a non-working spouse may instead receive a cash settlement representing the stock’s value at the time of the divorce.

A spouse may trade a stock option’s value for other assets

When a working spouse cannot buy or trade a stock earned as part of a compensation package, his or her spouse may request exchanging its value for other property. Based on the stock’s current market value, a divorcing couple may have an opportunity to negotiate a mutually agreeable division.

Florida’s laws classify marital property as the income and assets obtained during the union. The Sunshine State requires a fair split between both spouses, even if one did not work or financially contribute to an asset.

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