My Spouse Receives Stock Options as Part of Her Compensation Package. Will Stock Options Granted After Our Divorce Be Included in Income When Calculating Support?
Stock options granted to a party during a marriage are considered marital assets subject to property division upon divorce, even if the options vest after the parties are divorced. However, whether stock options that are issued after a divorce are treated as income once exercised when calculating support is less certain. The recent Appellate Court decision of Jones v. Jones, No. 20-P-1217 (September 14, 2022) suggests that they may – but it all depends upon the drafting of the divorce agreement and the – parties’ intent when entering into the divorce agreement. Divorce agreements, often called “Separation Agreements,” must have clear language regarding the definition of income, bonuses, stock options, and other forms of executive or deferred compensation. Absent clear language that the vesting of stock options granted after a divorce is to be considered income when calculating support, that income may not be included when calculating support.
An employer’s granting of stock options as executive compensation has become increasingly popular. This provides the employee with additional compensation and an incentive to stay with the employer long term (as the employee needs to be employed by the company when the stock options vest, sometimes years after the grant) … Keep reading