When divorcing, it is important to have a list of all the assets of both parties.¬† Very often stock options are overlooked in the case of a divorce.¬† Some spouses may not even know that stock options in a divorce can be considered a marital asset.¬† There are a few things to consider when splitting stock options.¬† A stock option is an option to buy a stock at a certain price.¬† Companies give these out as a benefit to an employee, but it is up to the employee as to whether or not they wish to exercise the stop option.¬† To exercise the stock option is to purchase the stock at the rate specified on the option.
The first thing to consider is whether the stock option is in fact an asset.¬† You would determine this by reviewing the price the spouse can purchase the stock using the option.¬† If that price is lower than what the stock is trading today, then the option is an asset.¬† If the price on the stock option is higher than what the stock is trading at today, the stock option is not an asset or a liability.
The second thing to consider are the tax ramifications on the stock option.¬† Capital gains or regular taxes on the asset can be imposed if the stock is sold and must be taken into account because whatever profit is made on the stock, it will be taxed.
A third thing to consider is if the stock is not a publicly traded stock, it may be difficult to value the option.¬†¬† An accountant may be able to help in valuing the stock option at this point using the financials of the company.
Please contact us for a FREE consultation to help you determine if a stock option split is necessary in your divorce.