Going through a divorce can be extremely stressful — even when considering only the emotional side of things. When adding on top of that the pressure and complications that arise from dividing assets, a situation could become too much to handle.
That’s why it’s important to make sure that you are well-prepared and understand your financial rights in many areas as you proceed. This blog will provide a brief overview on how to navigate the issues of dividing different types of executive compensation during your divorce.
Employee stock options
Traditionally, stock options have been the most common type of nonwage compensation awarded by an employer company. They have become less common after accounting rule changes took effect, but many plans still exist. Both spouses will have a right to plans like this; however, it can get complicated if the plans are partially vested at the time of divorce and can’t be touched for four years. This can make it difficult to calculate how much is owed to each spouse.
Employee stock purchase plans
This allows employees to buy company stock at a discount from the market price. These can either be sold immediately, or held for up to a year. These should be considered in any divorce.
Deferred compensation plans
Employees that decided to defer some portion of their compensation plan do so totally voluntarily. Therefore, when calculating spousal maintenance, it should be based on total compensation before any deferrals.
It’s important that due diligence is done when looking into executive compensation in your divorce. Doing so will take away a lot of stress from the proceedings.
Source: Divorce mag, “Divorce settlements and executive compensation,” Nancy Hetrick, accessed Aug. 14, 2017