Many divorces in Alabama involve the division of complex assets. From real estate to business interests to investments and stock portfolios, it is no easy task to divide one financial house into two. In order to ensure that the division of property and assets is appropriate, it is important to take an accurate inventory of all of the assets that are subject to division. This can be quite difficult, as a number of assets tend to be fluid in value.
One asset that can be difficult to valuate during the divorce process is unexercised stock options. Stock options may be a part of an employment perks package; they allow an employee to purchase shares in the company at a future time at a set price.
The value of stock options is never immediately clear, because this depends entirely on the price of shares on the future date during which the stock options may be exercised. The share price may be up or down when the options are ultimately exercised.
While it might not be possible to accurately assess the potential value of stock options, it is important for the nonemployee spouse to at least learn the type and quantity of stock options that have been granted to the employee as well as the vesting schedule.
Armed with this information, it is possible to account for tax implications in order to divide the stock options as fairly as possible and determine when they should be exercised.
Stock options are just one asset that may involve a complex property valuation during divorce. Birmingham residents are wise to work with skilled attorneys to help ensure their interests are protected during the property division process.
Source: The Wall Street Journal, “Splitting Up Stock Options in a Divorce,” Liz Moyer, Feb. 28, 2014