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Don’t ignore deferred compensation and stock options in a divorce

On Behalf of | Jan 7, 2022 | Property Division

Divorcing couples in California either need to negotiate a property settlement or wait for a chance for a hearing in family court. A judge dividing your property will use the community property laws when making decisions, so you can apply those same ideas when trying to negotiate a settlement with your ex outside of court.

You probably already know that you can ask for your share of the assets your household obtained during the marriage and the income that either spouse earned. What you may not think about are the special perks that your higher-earning spouse received from their job.

Some companies get quite creative in their attempts to motivate their employees or hire the best and brightest possible. Deferred compensation can be a way for a company to keep workers, as can stock options. If your spouse works in the position with some kind of deferred compensation offered, you shouldn’t overlook those valuable assets in your divorce.

When someone learned of or acquired the asset is what matters 

At first, it may seem strange to try to claim income that your spouse doesn’t technically have or doesn’t have control over yet. If they won’t receive their deferred compensation for another year, that doesn’t mean they can exempt that income from your divorce.

Instead, it means that you may need to negotiate an appropriate valuation for those assets to include them in the inventory of your marital estate. Although your spouse may oppose their inclusion at first, when they understand how community property laws handle deferred compensation, they will realize that those assets are subject to division in many cases.

They may willingly agree to factor in the value of that deferred compensation or the theoretical value of their stock options during a negotiation. If they are not, you may need to go to court to push for a fair resolution. In that scenario, you would need to create an estimated value for that compensation for the purposes of property division.

Divorce is only fair when you have a realistic idea of your marital estate

Especially as a dependent or lower-earning spouse, push for an appropriate division of marital resources for your future financial stability. Carefully reviewing your household finances and the inventory of assets that your ex provide can be a good starting point during a complex California divorce.

Learning more about California’s community property laws and your rights can help you push for appropriate property division solutions in your divorce.