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Stock options and restricted stock units can make a divorce more complicated because they do not always look like money you actually have.
You may have an account showing thousands of dollars in stock that you cannot touch yet. Your spouse may receive new grants every year as part of a compensation package. Some awards may vest next month. Others may not vest for several years.
That creates a basic question. Which part belongs in the divorce?
In New Jersey, the answer can depend on when the award was granted, what it was meant to compensate, and whether it relates to work performed during the marriage. You may want to discuss your case with New Jersey family law lawyers before moving forward with divorce proceedings.
Which Stock Options and RSUs May Be Marital Property?
Stock options and RSUs earned during the marriage may be marital property.
That does not mean every award is automatically divided. The timing and purpose of the grant matter.
For example, your employer may have issued RSUs as a bonus for work you already completed. Another grant may have been designed to keep you with the company for the next four years. Those two awards may be treated differently even if they appear on the same compensation statement.
How Vesting Dates Can Affect What Gets Divided
Vesting matters, but it doesn’t answer the whole question.
A vested stock award is usually easier to value because the employee has already earned the right to receive or exercise it. Unvested stock takes more work to sort out.
You may hear that an award cannot be marital property because it will not vest until after the divorce. That is not always the case.
New Jersey courts may look at whether the award was connected to work performed during the marriage. If it was, some or all of the value may still need to be considered even though the employee will not receive it until later.
That is why you should review the vesting date along with the grant date and the reason the employer issued the award.
What Happens to Unvested Stock Awards During Divorce?
Unvested stock is often where spouses disagree.
The employee spouse may say the award should stay separate because they have to remain employed for several more years before receiving it. The other spouse may argue that the award was earned because of work performed during the marriage.
Sometimes both arguments have merit.
An employer may use the same grant to reward past performance and encourage future employment. The challenge is figuring out how much of the award relates to each period.
That may require a close review of compensation documents. In higher-value cases, you may also need a financial professional to help trace and value the award.
Do not assume an unvested grant is worthless simply because it cannot be sold today. It may represent a substantial future asset.
How Stock Options and RSUs Can Be Valued and Divided
Stock compensation does not always have a fixed value.
RSUs may rise or fall with the company’s stock price before they vest. Stock options depend on the difference between the exercise price and the market price. Some options may eventually be worth a great deal. Others may never have meaningful value.
Several ways exist to address that uncertainty.
One spouse may receive other marital property in exchange for giving up a claim to the stock. In another case, the spouses may agree to divide the shares or proceeds when the award actually vests.
The divorce agreement needs to be specific.
It should identify which grants are included, what percentage each spouse will receive, when payment must be made, and how taxes will be handled. Without those details, you may end up arguing over the same compensation years after the divorce is over.
How a New Jersey Divorce Attorney Can Protect Your Share of Equity Compensation
Stock compensation is easy to miss when your attention is focused on the house, custody, support, or immediate expenses.
An attorney can help ensure the awards are identified before settlement negotiations end. That may include requesting grant statements, vesting schedules, tax records, employment agreements, and other compensation documents.
The goal is not simply to divide every stock award. It is to determine which portion belongs in the marital estate and how to handle it fairly. That matters whether the stock is yours or your spouse’s.
Work With DeTorres & DeGeorge Family Law to Navigate Your Divorce
At DeTorres & DeGeorge Family Law, we help New Jersey clients work through financial issues that are not always easy to see on a bank statement.
Stock options, RSUs, bonuses, and other forms of deferred compensation may represent a significant part of the marital estate. We can review the records, look at when the awards were granted, and help determine how they should fit into the larger property division.
Contact DeTorres & DeGeorge Family Law at (908) 923-0150 or (973) 828-8079 to schedule. The sooner stock compensation is identified, the easier it is to address it before your divorce is final.
