Successful professionals often have diverse portfolios for managing their assets and often benefit from equally diverse forms of income. In addition to base salary and benefits, they often also receive bonuses based on individual or company performance and other forms of incentive pay.
Stock options are a common means of promoting engagement in a new organization and/or convincing an onboarding executive to remain with a company for a fixed amount of time. They can be worth tens of thousands of dollars or more once an employee meets the criteria to receive said options.
Unfortunately, couples with complex portfolios and professional careers often face very complex divorces because of their financial circumstances. Stock options that are potentially available to one spouse may prove a sticking point in a divorce because of the issues discussed below.
1. Issues valuing the stock options
Stock options are often only available after several years of successful employment. The professional offered such compensation does not have it yet. However, they have already theoretically earned a portion of it during the marriage, making it part of the marital estate under Connecticut law.
Especially if the company does not yet offer stock, couples may struggle to put a reasonable price on someone’s future stock holdings. They also need to determine what portion of those stock options would be marital property and what would be separate property that they would not need to divide.
2. Splitting the stock options or their value
Typically, deferred compensation is not yet available for distribution in a divorce. Courts can order people to divide resources in the future, but then the potential exists for one spouse to leave their job and never receive those options, possibly out of spite to avoid sharing the value of those benefits with their spouse.
Directly dividing stuck not yet owned by a couple will typically not be an option. Therefore, the value set for the stock may have to influence the division of other assets rather than leading to both spouses holding a portion of the stock.
Learning more about how complicated holdings can influence Connecticut high-asset divorce proceedings can help people to better prepare for their upcoming property division negotiations.