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Are Restricted Stock Units Subject to Equitable Distribution in a New Jersey Divorce?

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There are many ways that large companies compensate their employees that go beyond a regular salary. Sometimes, compensation packages may include additional forms of payment to encourage performance overtime. One way this is done is through restricted stock units (RSUs). When a person who is given RSUs is going through a divorce and the value of these stocks is not yet known, it can be a complex situation when dealing with the division of assets. Continue reading below to learn how this is done and contact an experienced New Jersey divorce attorney for assistance with your case.

How are RSUs Divided in a Divorce?

In recent years, the New Jersey Appellate court decided a case regarding how this type of compensation should be evaluated in a divorce. This case addressed whether or not stock options granted to a spouse during their marriage, but not exercisable until after the date of separation, are considered marital property in a divorce. The court’s decision repealed a previous trial court decision and found that a “future performance” portion of a restricted stock award was not subject to equitable distribution, as much of the award was not fully vested until after the divorce was filed and after the marriage was over. 

In making their decision, the Appellate court determined a method by which these assets can be valued and divided. The stock award can be subject to equitable distribution if:

  • It has been made during the marriage and vests prior to the date of the divorce complaint
  • It is made during the marriage for work performed during the marriage, but becomes vested after the date of the divorce complaint
  • It is made during the marriage, but vests following the date of the divorce complaint. This is unless there is a material dispute of fact regarding the stock, either in whole or in part, that the RSUs were given in consideration of the future performance of the employee

The Appellate court included that the party who wishes to exclude the assets must demonstrate that they were issued for work performance after the complaint for divorce was filed.

How Can I Protect my RSUs?

Individuals who are in these situations and wish to protect their assets should retain the services of a knowledgeable attorney who can provide guidance through this time. This can include preparing you with the following documentation:

  • Testimony of you and your employer
  • A copy of your stock plan
  • Correspondence and additional documentation related to the stock award
  • Vesting schedule
  • Stock plan statements

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If you require experienced legal representation for a matter of Family Law, Supplemental Security Income, Medical Malpractice, Social Security Disability, or Legal Malpractice, Siragusa Law Firm is here to help. Contact our firm today to schedule a consultation so we can discuss your case.

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