The division of assets in a divorce can be contentious and complicated, even when it is only the family home and retirement accounts at stake. If valuing common assets can lead to disputes, imagine what can happen in a financially complex situation. Stock options are some of the most difficult assets to value and split in a divorce.
As a refresher, some employers grant employees the right to purchase company stock in the future at a set price. This allows the employee to buy the stock at a cheaper price and sell it for a significant profit. If your spouse has stock options, here are some tips for handling these assets during your divorce.
Make sure the stock options exist
Stock options do not show up on standard financial documents like W-2 forms or tax returns until your spouse exercises and vests the stock. Your spouse may also attempt to hide unexercised stock options. If your spouse is not forthcoming about these items, you may need to initiate the discovery process to uncover the existence of stock options. Not knowing about your spouse’s stock options can put you at a major financial disadvantage.
Obtain a valuation
It can be tricky to determine the value of stock options. While it is obvious that stock options are beneficial to the employee, it is nearly impossible to know their worth until they are exercised and sold. Independent evaluations of the performance and potential of the company can help you come to an estimated value. You may need help from an economist or forensic accountant to calculate the worth of this complex asset.
Fight for your fair share
Once the options have a value, it is vital for you to determine for a fair division. If you do not want to ask for a share of the options, you should receive some funds or property likely to be worth as much in the future.