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Life Events: Divorce

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I'm Getting Divorced: What Happens To My Stock Options? (Part 1)This is premium content

Linda Olup
When you and your spouse decide to split, your stock options will probably be divided too. Become familiar with the crucial issues related to stock options in divorce, including the treatment of vested and unvested stock grants, approaches to valuation, and the division of options in the property settlement.

I'm Getting Divorced: What Happens To My Stock Options? (Part 2)This is premium content

Linda Olup
Understand how the courts approach stock option valuation in divorce cases and their division as marital property.

I'm Getting Divorced: What Happens To My Stock Options? (Part 3)This is premium content

Linda Olup
Part 3 explores how some courts have regarded stock options as income for consideration in child support and alimony.

Divorce, Taxation, And Stock Options Can Make Strange BedfellowsThis is premium content

James Fitzgerald
Divorce is a roller coaster of uncertainty, stress, and emotion. To ease the pain, the IRS offers ways to minimize the tax burden on optionholders.

Nonqualified Deferred Compensation In DivorceThis is premium content

Noah B. Rosenfarb
Executives at public companies often have not just stock compensation but also nonqualified deferred compensation (NQDC), which can raise numerous issues in divorce. If your compensation includes NQDC, you and your advisors need to consider your equitable distribution alternatives for the property settlement agreement.

Splitting Stock Options In A Divorce

Marlene Browne
Stock options can be a source of tremendous wealth, so don't overlook them in a divorce.

Divorce Agreement Language

Larry Maples
Journal of Accountancy
While not specific to stock compensation, this article discusses the tax treatment of alimony payments and how to ensure they are tax-deductible. Although the article was published a number of years ago, its commentary remains relevant now.

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Is my spouse entitled to part of my stock options and other stock grants upon our divorce?

While there are some general trends, the treatment of stock options, restricted stock, and other equity awards in divorce is far from similar in all states. In general, the outcome depends on four factors...

How are stock options and restricted stock valued in divorce?This is premium content

After a court has decided which options and restricted shares are marital property, these grants need to be valued in some way. No uniformity exists among American courts in addressing the valuation of options for the property settlement. Rather, approaches...

Are stock plans affected by the Supreme Court's decisions on marriage equality?

These rulings do affect stock plans. Among the affected federal laws and regulations are those which shape the design and administration of...

How are stock options treated in a "community property" state?This is premium content

Under the concept of community property, each spouse...

How are stock options treated in non-community-property states?This is premium content

In virtually all non-community-property states, property acquired during the marriage is subject to equitable division...

In a divorce agreement, how is my ESPP treated? Is transferring to my former spouse ESPP stock that has not met the holding period a disqualifying disposition?This is premium content

ESPPs almost never allow the option/purchase rights to be transferred during...

Do I pay any taxes when stock options are transferred to my former spouse as a part of my divorce settlement?This is premium content

Under IRS Revenue Ruling 2002-22, an employee who transfers interests in nonqualified stock options (NQSOs) to a former spouse as part of a divorce settlement...

After stock options are transferred to my former spouse in divorce, who pays the taxes at exercise? How does my company withhold and report the taxes?This is premium content

The IRS has issued revenue rulings that clarify the withholding and tax reporting. The nonemployee-spouse would be responsible for those taxes at exercise. All tax payments (income and employment taxes) are withheld from...

How is restricted stock handled in divorce? Who pays taxes when restricted stock or vested company shares are transferred in a divorce settlement?This is premium content

The basic principles that apply to options transferred in a divorce settlement also should apply to the transfer of restricted stock. This would allow...

Instead of transferring stock options to my ex-spouse in the divorce property settlement, can I assign the economic benefits of her/his portion with the right to designate exercise?This is premium content

This constructive trust type of arrangement can be a way to handle any transferability restrictions in your stock plan (unless the procedure is prohibited). When you assign your ex-spouse the economic benefits of the stock options, you should be careful about...

How does a court determine whether my soon-to-be-former spouse should receive any part of my stock grant?This is premium content

First a court must decide (under the relevant state's laws) whether the property subject to division includes...

When are stock options and other equity awards deemed to be acquired for purposes of division in a divorce proceeding?This is premium content

Some courts have ruled that options are acquired at the date of grant...

Are stock options that were granted to me after my spouse and I separated but before the divorce is finalized subject to division in the divorce proceedings?This is premium content

The answer depends on the laws of your state. A Connecticut court answered the question affirmatively in...

How do the terms of my employer's plan or my grant agreement affect whether my spouse can be awarded any of my stock options or restricted stock in a divorce?This is premium content

Some plans allow the transfer of stock grants to a former spouse, or with stock options let the former spouse...

What is a qualified domestic relations order (QDRO), and how can it be used to divide stock options and restricted stock in divorce settlements?This is premium content

A qualified domestic relations order (QDRO) is a judgment, decree, or order by a court that assigns all or a portion of an individual's company benefits to...

Does it matter whether the stock options or other equity awards were granted for past service or for future service?This is premium content

If options were granted for future performance, an employee can argue to the court that...

Do courts use any rules of thumb to decide which stock options are marital property, and to divide stock options?This is premium content

To calculate the portion of divisible options that were earned or acquired during a marriage, courts often use...

How are ISOs usually handled in divorce?This is premium content

The Internal Revenue Code and IRS regulations prohibit transfers, so grant agreements cannot allow ISOs to be transferred in divorce. When divorce occurs, under the property settlement either...

In a divorce case, how do you argue that underwater stock options have value?This is premium content

When the net intrinsic value of the stock is zero, the attorney for the nonemployee-spouse has two ways to obtain...

How do I obtain details of my estranged spouse's stock grants for negotiating our divorce agreement?

You will need to hire a lawyer. Most likely...

How are stock options valued when I give my spouse money or other property instead of transferring the options?This is premium content

If legal title to stock options is not being transferred under the divorce decree, the options are valued so that other property (e.g., cash or a house) can be awarded to the nonemployee-spouse...

Are stock grants considered in determining child support and alimony payments?This is premium content

If stock grants are merely property, the ex-spouse has no future claim to them, other than as part of the property settlement. However, divorce courts are starting to...

Can an ISO be divided in a divorce?This is premium content

Generally, incentive stock options (ISOs) are not transferable in connection with a divorce. The IRS...

In a divorce agreement, I am transferring to my former spouse ISO stock that has not met the holding period requirement. Is this a disqualifying disposition?This is premium content

A transfer of shares incident to divorce is not a disqualifying disposition, but when the...

Can proceeds from stock options be garnished to pay a creditor, an ex-spouse, or a tax authority?This is premium content

"Garnishment" is a legal process in which a debtor pays an obligation with property and/or goods that are owed to or belong to the debtor but are in the hands of a third party. Whether this remedy applies to stock options depends...

In personal bankruptcy, can stock options be attached by creditors?This is premium content

It is unresolved whether in-the-money stock options that the bankrupt individual holds (1) constitute assets of the bankrupt party that are reachable by the creditors or (2) are...

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