James R. Schaffer, P.A.

How stock options might figure into a divorce

| Jun 13, 2019 | High Asset Divorce |

Many executives, professionals and other well compensated employees in the Tampa area may be offered a number of generous benefits in addition to their cash salary. Among others, an employer may offer the employee stock options.

To be clear, a stock option does not give the owner any actual interest in a corporation. However, they do give the employee the right to buy stocks in their employer at a later time.

The benefit, or drawback, to a stock option is that the sale price is already agreed upon. So, if an employee received options to buy 1,000 shares of stock at $10 a share, and the stock is trading at $20 a share five years later, exercising the options means making an instant $10,000 a share. On the other hand, if trading prices have remained stable or declined, the option has no real benefit.

Putting a value on a stock option can be tricky for a number of reasons. For instance, it can be very difficult to guess how the market for the stock will change over time. These market fluctuations have a great deal of influence over how much a stock option is worth.

However, stock options can be considered marital property under Florida law, especially if one spouse received them while married and while both spouses were contributing to the household. Therefore, stock options will have to be assigned a value so they can be part of the court’s overall property division.

Stock options raise a number of legal issues in a high asset divorce. Aside from estimating their value, there also may be issues of one person wanting to hang onto his stock options even to the point of trading off other property.