Dividing money and property during a divorce can be tricky, especially when one spouse has something called “deferred compensation.” This is a type of payment that isn’t received right away but could be worth a lot in the future. One common example is stock options, which give someone the chance to buy part of their company (called “equity”) later on.
Stock options are often given as a reward to employees for staying with a company or doing a great job. If they meet certain requirements, like working at the company for a certain number of years, they can buy these stocks, which might grow in value over time. While stock options are a great benefit, they can make things more complicated during a divorce.
What Happens to Stock Options in a Divorce?
In New Jersey, any money earned or property gained during a marriage is usually considered marital property, which means both spouses may have a right to it. This rule can apply even to things like stock options that haven’t been paid out yet.
Here’s why stock options can be tricky:
- They might not be available yet. If the employee hasn’t met the requirements to use their stock options, it’s hard to divide them.
- Both spouses might want a share. If the stock options were given during the marriage, the spouse who doesn’t work at the company may still have a claim to part of their value.
- Their value isn’t straightforward. Figuring out how much these stock options are worth—now and in the future—takes time and careful calculation.
How Can Parents Solve This?
When it comes to dividing stock options or other deferred compensation in New Jersey, there are a few steps to follow:
- Figure out what they’re worth. This includes estimating how valuable the stock options might become in the future.
- Decide what part belongs to the marriage. If the stock options were earned during the marriage, they may be shared. If they were earned before or after, they might not be.
- Come up with a fair plan. Since stock options often can’t be split right away, couples might need to trade other property or money to make things even.
What Can You Do?
If you or your spouse has stock options, it’s important to know that they could affect your divorce. Talking to a lawyer who understands New Jersey’s laws and working with financial experts can help you figure out the best way to divide everything fairly.
Even though stock options and other deferred payments can make divorce more complicated, with the right help, you can get through it and protect your financial future.
