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How are restricted stock and stock options treated in a divorce?

Many married couples in Longmont amass a variety of assets over time. Some of these assets come in the form of job benefits, such as restricted stock and stock options. And, just like any other property gained during the marriage, restricted stock and stock options may be subject to property division in the event of a divorce. Therefore, it may help those who own these assets to gain a better understanding about how they can be handled in a divorce.

Restricted stock includes shares of the company that are given to the worker for free, but cannot be sold except in certain circumstances. Stock options include the right of the worker to purchase stock in the company for a certain amount at a certain date.

Just like other assets, restricted stock and stock options can be divided in a divorce. However, due to the unique nature of these assets, there are certain points spouses should keep in mind.

First of all, it can be easy for a spouse to hide the fact that he or she has restricted stock or stock options. These assets won't show up on a person's W-2 or tax returns. In fact, if these assets haven't vested, they may not show up on any type of financial record. It may be necessary for a spouse to turn to their ex's employer for this information or even to the court for a subpoena.

Next, the value of these assets will need to be ascertained. Unfortunately, when it comes to restricted stock and stock options in companies that are not publicly traded, it can be difficult say what they are worth until the worker decides to sell the stocks.

To further muddy the waters, the way these assets are treated varies by state. In some states, if these assets have not vested by the date of separation, they are considered to be separate assets. However, in other states they will be considered to be marital assets, although their valuation is contingent on several factors. Professional advice may need to be sought not only to value these assets, but also to ensure they are divided fairly.

For some people restricted stock and stock options can be desirable assets to have. A divorce attorney may be able to provide more advice as to how these assets can be divided in a divorce.

Source: Forbes, "Dividing Stock Options And Restricted Stock In Divorce," Jeff Landers, March 19, 2014

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