Your Guide Through Challenging Times

How executive compensation can complicate property division

On Behalf of | Feb 24, 2022 | Property Division |

If you and your spouse are a high net-worth couple, property division can complicate your divorce. However, it is not only the number of assets you have but also the different forms they can take.

According to Kiplinger, a steadily increasing number of employees across the country have executive compensation. If either you or your spouse has it, your property division may be more complex.

What is executive compensation?

Executive compensation consists of stock options. Your employer may give you the option to buy stock in the company you work for at some point in the future, usually one to five years, at the price it is selling for today. Assuming that the company’s stock goes up, you stand to make a profit when the vesting period is over. Companies may offer stock options as an incentive to employees.

How does executive compensation complicate property division?

Stock options are subject to property division in divorce just like any other jointly held assets. However, employers do not allow employees to transfer stock options to someone else. Therefore, if either you or your spouse has stock options that have yet to fully vest, it may be necessary to put them in trust until you can exercise them. Then it is the responsibility of the employee spouse to pay taxes on them.

Seeking to avoid dealing with the complications, a dishonest spouse may attempt to hide those stock options. If you find yourself in a situation where your spouse is attempting to hide executive compensation from you, it can be difficult to track down because there are few records of executive compensation on paychecks or tax returns.