Attorney Popovitch, founder and managing partner of Popovitch Law LLC, has helped numerous clients navigate separations, divorces, and asset divisions involving stock options and RSUs. Whether these matters are simple or complex, it is critical to have experienced counsel.
Stock options granted to a party during a marriage are considered marital assets subject to division, even if the options vest after the parties are divorced.
Stock options granted to a party during a marriage are considered marital assets subject to division, even if the options vest after the parties are divorced.
Whether stock options that are issued after a divorce are treated as income once exercised when calculating support is a grey area. The Appellate Court decision of Jones v. Jones, No. 20-P-1217 (September 14, 2022) suggests that they could be treated as income once exercised – however it all depends upon the drafting of the Separation Agreement and considering the parties intent at the time of drafting/entering into the Agreement.
The Separation Agreement has to have precise language regarding the definition of income, bonuses, stock options, and other forms of compensation. Absent clear language that the vesting of stock options granted after a divorce is to be considered income when calculating support, that income may not be included when calculating support after judgment of divorce nisi is entered.
The Child Support Guidelines state: “income derived from stock options and similar incentives, excluding any income from the coverture portion allocated at the time of the divorce” is included in a party’s income for calculating child support. The vesting of stock options, not otherwise includable in the division of the marital estate, should be included in a party’s income when calculating child support. Alimony stands on a different footing. The parties can define income for purposes of calculating alimony in their separation agreement. The drafting of the separation agreement is of utmost importance.
Please contact POPOVITCH LAW LLC for guidance and representation to draft your clear and unambiguous separation agreement to protect your income and assets after divorce enters
