How Does New York Handle the Division of Stock Options and RSUs During Divorce?

Going through a divorce is one of the most stressful life events to go through. Not only is this the end of an important relationship, but untangling the life you and your spouse have built together can be overwhelming. As such, one of the most complex aspects of dividing property between you and your spouse is determining how to handle stock options and RSUs. Unfortunately, this is an incredibly difficult process, so it’s in your best interest to connect with Long Island property division lawyers to help you navigate these difficult times. The following blog explores some of the most common questions regarding this matter, so you can better familiarize yourself with this process and what to expect.

Are Stock Options and RSUs Deemed Marital Property?

It’s important to understand that New York is an equitable distribution state. This means that the courts will divide assets based on each party’s contributions to the marriage as opposed to automatically dividing assets evenly. As such, the courts must determine what assets are considered marital property. These are assets that are generally obtained during the course of the marriage, regardless of who technically owns them.

To determine whether or not stock options and RSUs are jointly owned, the court will first examine when the option or RSU was obtained, before considering why they were granted. If the option or RSU was obtained during the marriage for work done or milestones achieved during the marriage, it will generally be considered marital property.

It’s important to understand, however, that the court may also consider that a portion of the stock option or RSU is marital property, leaving the other portion as separate property.

How Are These Assets Valued in a Divorce?

Unfortunately, valuing these assets during a divorce can be incredibly difficult due to the complex nature of these assets. Because these are volatile assets, meaning the value can change, there are a number of options the court may utilize to divide these assets.

One option is to grant each party a portion of a stock or RSU based on its present value at the time the divorce occurs. However, this may be unfair, as the value can drastically increase at a later date once it’s fully vested. As such, the court may utilize different models and formulas to determine what the assets’ expected value is, and divide it based on that. However, some courts will defer the distribution of these assets until they have vested for the fairest and accurate way to divide these assets.

As you can see, dividing these assets can be incredibly difficult and overwhelming, which is why it’s in your best interest to connect with an experienced attorney with the Sklavos Law Firm to help you navigate these complicated legal matters. Our team will do everything in our power to fight for the best possible outcome and the assets you deserve during this process. When you need assistance, contact us today to learn more.