Equity compensation can create difficult financial issues in divorce because value depends on timing, vesting, employment purpose, tax treatment, and future events.
Restricted stock units, stock options, performance awards, deferred compensation, and other equity-based benefits may not function like ordinary investment accounts. Some awards are vested. Others are unvested. Some relate to past compensation. Others are intended to retain the employee or reward future service. Some have clear current value. Others depend on future stock price, continued employment, performance conditions, or exercise decisions.
Common questions include:
- When were the grants awarded?
- When do they vest?
- What was the purpose of the award?
- Were the awards earned during the marriage, after separation, or across both periods?
- What tax treatment applies at vesting, exercise, or sale?
- Are shares available for division, or is a cash offset being considered?
- Who bears market risk between settlement and vesting?
- How will future tax withholding be handled?
- How does equity compensation affect income available for support?
In Washington divorce matters, attorneys often need the financial information organized around dates and characterization issues. Financial analysis can help identify the grant history, vesting schedule, value assumptions, tax considerations, and settlement options so counsel can evaluate how equity compensation fits within the overall case.
The goal is not only to value the asset. The goal is to understand how the asset works and how different settlement approaches affect risk, tax, liquidity, and fairness.