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Are Future Stock Options Divisible in Divorce?

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b2ap3 thumbnail Upset Same Sex Couple fDetermining what is considered marital property that is divisible in divorce can be confusing without the help of an attorney. One asset that is frequently overlooked by people considering divorce are employee stock options. Some companies will give employees stock options as part of a benefits package.

Most employee stock options are non-transferable, but they are still considered marital assets subject to equitable division in a divorce.

When is Stock Subject to Division After You Divorce?

According to In re: the Marriage of Balanson, 25 P.3d 28 (Colo. 2001), employee stock options are considered marital property only when the employee has an enforceable right to the options. This means that the options must be formally vested before the divorce is finalized.

For example, consider when unvested stock options are granted as part of a signing bonus, but the options are conditioned upon the passage of time or when future performance goals are met. Until the time period passes or employment condition is met, the unvested options are not an enforceable right, and they would likely not be divisible upon divorce. This is because the employee has no enforceable right to unvested stock options: if the employee quit before the time period was complete or did not meet the employment condition, the employee would lose the right to the unvested stock options.

Once the time period or employment condition has been met, the stock options would be considered vested and an enforceable interest. Then the options could be considered marital property, subject to division in divorce.

If one spouse has unvested stock options during divorce, and later they vest, they would be considered property for post-decree child support issues. If the employee exercises the stock options after divorce, income from the exercise of the options could affect post-decree child support.

Contact a Lakewood Family Law Attorney Today

As you can see, figuring out whether stock options are an enforceable right and whether they are marital property subject to division in divorce can be complicated. If you have questions about stock options as marital property, contact a Denver divorce attorney.