How are stocks divided in a San Diego divorce? What do you need to know about stocks, stock options, vested versus unvested and the division of community property in your divorce?
We’ll begin with a few community property basics. Community property (assets and debts) in a California divorce is to be divided equally between the parties. In some cases property or debts may be the “separate” property of one of the former spouses and therefore not subject to division. Separate property is generally an asset or debt which one of the spouses owned or owed prior to the marriage, and for which no marital funds were ultimately invested or expended. The Certified Family Law Specialists at Burke & Domercq will help you to evaluate the nature of community property and separate property in your individual case.
This conversation will focus on stocks which are considered to be community property.
The question of how are stocks divided in a San Diego divorce is not a simple or straight forward equation. Not all stocks are alike.
Stock options are a lot more common today. Companies often offer their employees the opportunity to purchase stock in the business during a specified period of time at a cost which is lower than the present market value of the stock. Usually this requires the employee to work for the company for a specified period of time.
A stock is considered to be “vested” when an option to purchase is completed and the complete purchase price of the stock has been paid. Stock related assets are considered to be “unvested” when one of the former spouses is eligible to acquire stock, but the associated timeframe has not been fulfilled or the purchase price has not yet been paid.
How are stocks divided in a San Diego divorce to ensure each spouse genuinely receives an equal share? The simple method would be to simply divide each specific stock holding in half and give half of the shares to each former spouse to do with as they will. This obviously is not possible when stock options have not yet been executed or when a stock is unvested.
The other option is to establish the net cash value of the stocks if options were exercised, all stock was fully vested or if specific shares of stock were sold. The “basis” in any asset will have a substantial impact on the actual cash value of the asset and this is why it is important to work with the Certified Family Law Specialists at Burke & Domercq.
The full answer to ‘how are stocks divided in a San Diego divorce?’ is quite legally and financially complex. Protect your own interests and contact us or call 760-389-3927 to schedule an appointment for a remote or socially distanced consultation with one of our experienced Certified Family Law Specialists.