How the court divides stock options in a divorce

During your divorce in South Carolina, one of the most complex processes will be dividing your assets. Things can get tricky, especially if you have certain assets, such as stock options.

Stock options allow you to buy stock at a certain price in the future. This gives you a nice advantage because you can generally buy stock at a low price for a nice profit. Forbes explains, though, that dividing stock options in your divorce is tricky.

Marital asset or not?

They are generally a marital asset because one of you earned them instead of pay or other benefits from work, which contributed to the household finances.

The court may also need to look into whether the stock options are an actual asset at the current time. This might involve looking into state law to see if they meet the criteria.

Figure the value

You will have to figure out an estimate of the value of the options. This is not an easy task since you really have no idea what the payout will be when you actually cash them in. There is also no guarantee they will actually pay off. Unless your spouse works for a company that is doing exceptionally well and got the options back when it was a start-up, you cannot guarantee the option is worth much at all.

In general, value comes from current rates. You should be able to find that information through public records.

Cashing out

It is usually smart to cash out your stock options as soon as you get them after your divorce. This may not make you the most possible money but it can ensure you get at least something from them. Plus, you will be able to plan out the tax liability as part of your divorce settlement because you will know those figures.

Stock options can be valuable. Do not discount them when figuring out your divorce settlement.