Divorce is a complex process, especially when a couple has a lot of assets. One area that raises questions is the division of stock options.
Community property
Washington follows community property laws, which means that any assets acquired during the marriage belong to the couple, and the court divides them equally in a divorce. This includes stock options.
Stock options can also be categorized as separate property if they were acquired before the marriage or if one of the spouses received them as a gift or inheritance.
Vested vs. unvested
This distinction is significant during divorce because vested stock options are those the employee has the right to exercise, whereas unvested options are not yet available.
Vested stock options acquired during the marriage are typically community property, meaning both spouses can claim them as a shared asset.
Unvested options have potential value, and courts may assign a value to them based on the likelihood of them vesting in the future, after which they can be factored into the distribution of assets.
Valuation
Valuing stock options can be challenging because the process involves predicting the market’s condition in the future and the company’s performance.
Many people work with financial experts who can help couples determine the value of stock options. This can be especially helpful when there is a disagreement about their value.
Dividing stock options in a divorce can be complex, necessitating a thorough understanding of community property laws and finance. If you face divorce and have stock options, it is advisable to have counsel who can advocate for you and help you reach the best outcome possible.