What happens to stock awards in divorce?

On Behalf of | Feb 9, 2022 | High-asset Divorce

The stock options and restricted stock units (RSU) that a person receives throughout their career can be particularly valuable parts of their portfolio. These stock awards could become even more valuable over time, depending on what the future holds.

The National Center for Employee Ownership estimates that nine times as many workers hold these options today compared to the 1980s. As a result, stock awards are an increasingly common financial concern during the divorce process. What should divorcing people know about stock options?

How does Virginia address stock awards?

A 2011 case determined that stock options earned during a marriage are marital property, regardless of whether those stock awards are vested during the marriage or after a divorce. As a result, Virginia courts will divide stock options in the same way that they would other property, attempting to reach a fair or “equitable” solution that reflects each spouse’s financial situation.

How can the court divide stock awards?

Generally, if your spouse has not exercised their stock options or if their restricted stock units are not yet vested, the court can divide those stock awards in two different ways. Either they can base property division on the current value of those stock options and RSUs, or you can delay the division of these assets.

One important thing to consider when determining which path to take during property division is that the value of stock awards can change dramatically over time. While waiting to exercise these options can lead to significant gains if the company grows in value, you risk losing that value if the company decreases in value.

While determining the fate of stock options and RSUs can involve complex financial decisions, it is possible to reach a solution that protects your finances during property division.

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