Nancy L. Sponseller

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Couples shouldn’t overlook stock options in divorce negotiations

On behalf of Law Office of Nancy L. Sponseller posted on Friday, January 10, 2014.

Ohio owners of stock options may know that those financial tools have the potential to become worth a great deal of money. This means that they might make up an important part of a divorce settlement, and experts recommend that the possible sale of appreciated stock in these options be considered during negotiations to prevent headaches during and after the marital dissolution process.

It may come as a surprise that stock options could be important after a divorce is finalized, but since they may bring in money in the future and were part of marital property at the time of the split, they could affect spousal support long after the exes sign on the dotted line. Part of the reason why divorcing couples and even their legal representatives fail to notice stock options is that they give an employee the opportunity to buy company stock that has appreciated significantly at the lower price the stock sells for at the time of the granting of the option.

This means that they have no monetary value until the stock goes up sometime in the 10 years after the vesting period and indeed may never have any value if the stock price doesn’t rise. Experts caution against assuming that stock options will remain valueless, however, and recommend their inclusion as marital property to be shared. They might be best classified as potential future income when deciding what to do with them during the asset division process.

A high asset divorce can be complex and include unusual financial entities like stock options. An attorney may be helpful in working through the many divorce legal issues faced by couples when it is time to decide on property division, child custody and child support.

Source: Private Wealth, “Weighing Divorce ‘Options’“, Marc D. Bello, January 07, 2014