What to Know About Restricted Stock Units & Divorce in California

What to Know About Restricted Stock Units & Divorce in California

Many individuals who work for large companies or corporations are eligible for various compensation packages, which often include restricted stock units. Essentially, a restricted stock unit allows a person to make more than their standalone salary. However, unfortunately, in many cases, when someone with a restricted stock unit gets a divorce, depending on the circumstances of the divorce, the RSU may be subject to equitable distribution. Read on and reach out to our knowledgeable Los Angeles divorce attorneys to learn about restricted stock units and whether yours may be at stake. Here are some of the questions you may have:

What happens to a restricted stock unit during a divorce if it was granted and vested during marriage?

Employees who wish to keep their vested stock are allowed to consent to an equalization arrangement based on the current fair market value. However, if you are looking to split the stock, you may sell half and give it to your spouse in accordance with the fair market value.

What happens to an RSU that was granted during marriage but vested afterward?

In certain cases, as long as you and your spouse can agree to wait until the RSU is vested, you can divide it equally based on the fair market value. However, if your spouse does not wish to wait, it is often difficult to value an RSU before it is vested. On the other hand, you can value any non-vested RSUs and give your spouse property of equal value, or you can even classify your RSU as an earned marital asset, and from there, you can divide it equitably based on the rules set out in the Hug and Nelson California Appellate Cases.

Is there a way to protect my restricted stock units from a divorce?

Fortunately, there are ways to protect various stock options from a divorce, though you must be proactive. Generally, the following documents are the best ways to protect your stock options from the divorce process:

  • Testimony from you and your employer
  • A copy of your stock plan
  • A vesting schedule
  • Statements regarding your stock plan
  • Any other documentation regarding the stock award

Regardless of your circumstances, you can depend on our knowledgeable California divorce attorneys to guide you through every step of the legal process ahead. All you have to do is give us a call.

Contact our experienced Los Angeles firm

Divorce and family law issues are notoriously complicated and personal, which is why you must hire an attorney with years of experience, as well as the compassion and skill needed to handle these sensitive matters. For the qualified, dedicated legal representation you and your family deserve and need, contact Zitser Family Law Group, APC today.

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