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How are restricted stock and stock options handled in divorce?

Dividing marital property can be one of the most difficult portions of a divorce. Illinois couples who have experienced a divorce can attest to this. Bank accounts, homes, property and even items of sentimental value can all be at risk of being split or lost to the other spouse. Part of the process of identifying a property division settlement is determining the value of all assets or liabilities. This must happen so that the ultimate settlement is fair.

The valuation process for some assets can be very complicated. Stock options and restricted stocks are some examples of this. An article in Forbes explains that stock options are essentially ways to incentivize or reward employees when a company is new or has a limited ability to provide immediate financial payouts. They give an employee the right to buy a company’s stock at some point in the future for a price hoped to be below market value at that point. A restricted stock costs an employee nothing but can only be redeemed when certain conditions have been met such as employment for a certain number of years.

One of the first things you should do is make sure that all such assets are fully disclosed prior to identifying the final settlement. If need be, this may involve requesting documentation directly from a company. Once that has been done, utilizing the expertise of a forensic accountant can sometimes help to determine how much these assets are worth. Factoring in any potential taxes should also be part of the process.

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

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