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How to handle issues with stock during divorce

On Behalf of | Feb 26, 2022 | High-Asset Divorce

When a couple decides to get a divorce in Indiana, one of the most important decisions they will make is how to divide their assets. This can be especially difficult when significant investments or stock options are involved. The following discusses the basics of dividing restricted stock awards and stock options.

Restricted stock awards and stock options in an Indiana divorce

Generally, restricted stock awards and stock options are considered marital property in Indiana. This means that the court will divide them equitably between the spouses during a divorce. But first, it will determine what is separate property (everything you acquired before marriage or gifts and inheritance from a third party) to know which assets to split.

It can be quite challenging to determine which parts of the restricted stock awards and stock options are separate or marital. For instance, your employer may have granted you stock options before your marriage, but they vested during the time you were with your spouse. You could also receive stock options during your marriage, but they vest after you and your spouse separate. Depending on your specific circumstances, the judge will find a fair way to apportion these assets between marital and separate property.

Among the factors that the court will take into account include:

  • The length of your marriage
  • Your contributions to the marriage (both financially and as a homemaker)
  • Your financial situation
  • The tax implications of dividing those assets

Divorce and taxes

When dividing assets in a high-asset divorce, it is important to consider the tax implications of each decision. For instance, in most cases, the spouse who receives the assets will pay for any taxes associated with them. And if you decide to cash out and divvy up the proceeds, you will also experience significant tax consequences. So you should consider other alternatives that won’t affect what you have, like trading your stock options for other assets or keeping the account as is and splitting the proceeds.

You can either go to court or divide your assets using alternative methods like mediation or arbitration. Just ensure you know where you stand in your divorce negotiations to get what you deserve.