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How are stock options handled in a divorce?

On Behalf of | Mar 17, 2015 | High Asset Divorce |

People who live in Illinois and face the prospect of divorce must struggle with many challenges. When unable to agree on how to stay married, the process of agreeing on how to divide assets is rarely easy either. Property division determinations can be very complex in today’s society. For many couples, homes and vehicles are far from the only assets to be considered. Retirement accounts, other investments and business assets all become part of the mix. Perhaps two of the most complicated forms of assets to value and divide are restricted stocks and stock options.

An article in Forbes notes that restricted stocks may or even stock options for companies that have already gone public can be easier to value because there is a current market for them. Professionals such as forensic accountants may be required to help determine the worth of stock options, especially if a company is not publicly traded at the time of the divorce. The health and performance of the business, its potential and market position as well as how far in the future any options will vest can all factor into the ultimate valuation of these assets.

Spouses should be aware that taxes will come into play when any restricted stock or stock option is sold. In most cases, these are assessed as standard income but in some situations they can be assessed as capital gains. For options or stocks that are not allowed to have ownership transferred but that must be split between spouses, the named owner may be required to sell them and then pay the other spouse accordingly.

This information is not intended to provide legal advice but general information about dividing stock options and restricted stocks during a divorce in Illinois.


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