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How to divide executive compensation in divorce

On Behalf of | Jun 21, 2021 | Divorce

Stock options and restricted stock units are often granted to executives as part of their yearly compensation. This can add up to big money that the non-employee spouse doesnt want to leave on the table if getting a divorce. The problem, dividing executive compensation like this can prove a difficult feat. Thankfully, Maryland residents who find themselves dealing with such assets can turn to an experienced divorce attorney for assistance in achieving fair settlement terms when all is said and done.

Common forms of compensation

These are common forms of compensation employers are providing their employees, particularly those with high-level positions. Stock options and RSUs are meant to spark motivation, spur productivity and boost morale. It is also a way companies keep their best employees. Those who arent sure if their spouse is receiving such compensation may want to do a little digging to find out before agreeing to a divorce settlement. They can be easy to hide.

Typically non-transferrable

The problem with these forms of compensation is they are typically non-transferrable. Meaning they cannot just be transferred to a spouse as part of a divorce settlement. If for some reason, they are transferrable, one must be careful because they can lose value and be worth little if anything in the end.

How to divide these assets

When stock options and RSUs are considered marital assets in a divorce, there are a couple of ways to go about dividing them. First, the settlement could state they are to be held in a trust and cashed out to the non-employee spouse as the options are sold or exercised. When going this route, it is necessary to specify in the settlement terms who is to be responsible for any taxes due, as to avoid any arguments later. Second, one may choose to forgo taking a piece of these assets in favor of requesting other assets one can have right away, such as real estate, a bigger chunk of retirement savings and other valuable property.

Get help

When divorcing a spouse who receives executive compensation, get help negotiating an equitable settlement. It may take time, but it is worth it in the end. Maryland residents shouldnt have to walk away with less than they deserve simply because this kind of compensation is difficult to divide.

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