Nancy L. Sponseller

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Calculating stock option value in a divorce proceeding

On behalf of Law Office of Nancy L. Sponseller posted on Wednesday, March 26, 2014.

Figuring out how to divide assets in a divorce in Ohio can be complicated when the assets do not have a set value or when the value is not readily obtainable. For instance, with restricted stock, it may be difficult to determine the current value of stock in a privately held company. It may also be debatable whether stock in a company was awarded for work efforts before marriage or work efforts during marriage or a combination of both. Even if an employee is awarded a benefit during marriage, that benefit will not be considered marital property if it was given for pre-marital work.

In Ohio, courts may also look at the value of unexercised stock options to determine a parent’s income for the purpose of child support calculations, even though the stock options will not produce any revenue until they are exercised. Since unexercised stock options do not appear on a tax return or a W-2, individuals who are concerned that their spouses may be hiding assets may require the help of an attorney to conduct discovery and issue subpoenas to obtain business records relating to these assets.

Options that are currently “underwater,” meaning they have no value because they do not offer employees a cheaper price for shares than the market rate, may still gain value in the future if the market price goes up. People may not want to assume that these options have no value when laying claim to a portion of their spouses’ assets.

A family law attorney may help clients create an inventory of all income and assets that may be construed as marital property. Attorneys may also have their own forensic accountant experts on whom they rely to help them determine the value of stock options and other complex financial assets.

Source: FindLaw, “Murray v. Murray,” Feb. 8, 1999

Source: Forbes, “Dividing Stock Options And Restricted Stock In Divorce“, Jeff Landers, March 19, 2014