Going through a divorce can be an incredibly complicated matter, not just emotionally, but legally and financially. As such, it’s important to understand that Louisiana, like all states, has a system in place to divide assets to each spouse during a divorce. One matter that many are unsure how to navigate is the division of assets like stock options and RSUs. The following blog explores what you should know about these issues, including he method used in Louisiana, how employment agreements can impact this matter, and the importance of working with a Monroe, Louisiana property division lawyer to help you navigate these difficult times.
How Does Louisiana Handle Division of Property Like Stocks and RSUs?
All states adhere to one of two methods of distributing property between divorcing spouses. In Louisiana, the court adheres to the community property method of dividing assets among a couple. Essentially, this means that all assets obtained during the course of the marriage are considered marital property, meaning they are the property of both spouses, regardless of who technically owns it. As such, under the community property method of dividing assets, all marital property will be split equally between the spouses. This differs from equitable distribution states, in which the court will divide assets fairly, rather than an automatic even split.
As such, to divide assets like stock options and RSUs, the court will need to determine if these are marital or separate property. To do so, the court will examine when they were obtained, when these assets vested, or when the reward was granted. As such, options that have been granted during the marriage or that vested during the marriage will be considered marital property. This also applies to RUS that grant rewards for work performed during the marriage. Stock options and RSUs that are granted for work that occurs after the separation are typically considered separate.
How Do Employment Agreements Impact the Division of Stock Options and RSUs?
Many companies provide employment agreements regarding the stock options and RSUs granted to employees. In fact, many of these agreements will strictly prohibit the transfer of these assets to anyone other than the employee. This means that the court cannot simply divide these between the two spouses. If the court attempts to, the company will likely refuse to recognize the other spouse as a shareholder.
In the event a stock option or RSU cannot be divided between spouses, working with an attorney to examine other legal options to ensure the division of assets between you and your spouse is critical. One option is to create what’s known as an “if/when agreement. Essentially, this allows the spouse to keep their options, but must pay their ex-spouse a share of the assets if and when they are granted or vested.
Another potential option is to let the spouse retain these assets in exchange for assets of equal value. This helps ensure that each spouse receives a fair outcome in terms of property division.
Going through a divorce can be incredibly difficult, which is why it’s in your best interest to connect with an experienced attorney with Breithaupt, DuBos, and Wolleson. Our firm understands that these matters can be incredibly stressful, which is why we will do everything in our power to make this process as simple as possible while fighting for the best possible outcome on your behalf. When you need assistance, contact us today.