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Are restricted stock units community or separate property?

On Behalf of | Aug 19, 2020 | High-Asset Divorce |

As many married couples are already aware, Washington is a community property state. This means that all assets acquired during a marriage are typically subject to division should a couple choose to divorce, unless specified otherwise within a prenuptial agreement.

While many Washington residents might already know this, there is some ambiguity as to whether certain assets are considered community or separate property. Restricted stock units (RSU) are a prime example.

What is a restricted stock unit?

An RSU is a type of compensation offered by employers in which company stock is granted to an employee. At the onset, these stock units have no real value. They need to vest over time before an employee can do anything with them. Only a certain percentage of RSUs will vest every year or after certain performance goals have been met, so it can take several years before employees have access to 100% of the funds.

When are RSUs considered marital property?

Typically, assets acquired before marriage or after a split are considered separate property. If, however, a spouse receives RSUs before marriage but they vest during the course of the marriage, a portion of their value can be considered marital property. Additionally, if the stocks were granted during the marriage but vested after separation or divorce, a portion of them may still be classified as marital property.

Figuring out if splitting restricted stock units is necessary or even how to go about doing it can be a complicated affair. Thankfully, this is not something Washington residents have to tackle on their own. With the assistance of experienced legal counsel, divorcees can determine if their RSUs are community or separate property and figure out the best way to divide them, if necessary.