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How Are Stock Options Handled During a New Jersey Divorce?

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Because not all assets are liquid, meaning they can easily be converted to cash when going through a divorce, understanding how specific, complex assets are split is critical. For example, if your spouse has stock options, you may wonder whether or not this is considered marital property and, if so, how these are handled. Luckily, experienced Somerset County property distribution attorneys can help you through these complex matters to ensure you receive the funds and assets you are entitled to during your divorce. The following blog explores more about how stock options are handled.

What Are Stock Options?

Essentially, stocks represent a piece of ownership in the company, meaning you are essentially purchasing future shares of the company. This means if the company earns money, your stock will go up, but if the company does poorly, you’ll lose money.

Stock options are a form of compensation that gives employees the right to buy a specific number of shares at a predetermined, discounted price. These are often included in benefit packages for potential employees and can help encourage retention. Many start-ups use these, so though the stock may not be worth much at first, its value can grow over time, encouraging employees to remain at the company and work hard, so the company succeeds and their stocks increase in value.

How Are These Assets Divided in a Divorce?

During a divorce, stock options must first be determined as marital or separate property. Generally, if the asset was obtained during the marriage, it is considered marital property. This is regardless of whether or not the options have been vested.

It’s also important to understand how these assets are valued since they represent future potential profits. If the court handles the case, it will generally assign the market value to the stock option.

If you and your spouse are working together to determine the division of assets, you may want to explore alternate options. For example, the non-employee spouse may request assets equal in value to the shares at the center of the division. Similarly, the company may agree to transfer a portion of the stock option to the non-employee spouse.

What Should I Do if I Need Assistance With the Distribution of Assets?

As you can see, dividing assets in a divorce is more complex than spouses walking away from the marriage with half of the property. That’s why it’s in your best interest to connect with an experienced attorney to help you navigate the complexities of this matter. Having a lawyer to represent you during these matters means you have someone ready to fight for you during these complex times.

At the Siragusa Law Firm, we understand these matters can be overwhelming if you’re unfamiliar with your rights as a divorcing spouse in New Jersey. That’s why our team is proud to represent you. We know divorces can be emotional, so we will handle the legal complexities to help fight for a favorable outcome while you heal and focus on the next chapter of your life. Connect with us today to learn more.

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