San Jose Family Law Attorney Discusses Division of Stock Options in Divorce
Generally, community property, or property that is not specified by statute to be separate property, will be divided equally between the parties in a dissolution action in California. Certain property, however, have specific rules for how the property is characterized and divided in a divorce; among them are stock options. With the big “internet boom” in Silicon Valley, and the proliferation of companies issuing stock options to their employees, more and more couples are presented with the questions of how to divide this asset in a divorce.
When stock options are granted to an employee before the date of separation but do not become exercisable until after separation, the Court has found that it has broad discretion in allocating the community and separate property interest. Stock options are generally considered community property, and therefore subject to division, to the extent that work done to earn them is performed between the date of marriage and the date of separation. Thus, in order to figure out if the option is subject to division, the period of employment to which the option may properly be allocated needs to be ascertained. According to case law, the circumstances of the grant must be discovered in order to allocate the option to a period of employment.
When stock options are granted to an employee after separation, at least one Court has found that those options were entirely the separate property of the employee spouse and not subject to division because the employee had no expectation of the grant, and could profit only if the stock value rose after the date of the grant.
If you or someone you know is going through a divorce, the team of family law attorneys at Sagaria Law, may be able to assist you with your case. We can answer any questions you may have regarding division and characterization of property and will assist you through the process. We also handle custody, support, and other family law matters; and work with client from Santa Clara County, Alameda County, Monterey County, San Mateo County, and surrounding areas. Contact our office today to schedule a consultation with one of our attorneys.