What Happens to Stock Options in an Illinois Divorce?
Complex assets like stock options can complicate the divorce process substantially. Often, because stock options are granted as an incentive for continued service, they depend on other factors such as tenure and performance. Furthermore, different types of stock options can have drastically different values, making it difficult to assign an exact value during the divorce process. If you are getting divorced and you or your spouse own stocks, stock options, investments, business interests, or other complex assets, make sure you work with an experienced divorce attorney who can guide you through the asset valuation and division processes.
Addressing Stock Options During Divorce
Stock options give an individual the right to purchase or sell stock at an agreed-upon price. Often, employees receive stock options that allow them to purchase stock in the company after a certain amount of time. Stock options are considered compensation just like income, bonuses, commissions, and other types of income. This means that stock options earned during the marriage are considered marital property. Marital property in an Illinois divorce is subject to equitable division. Each spouse is entitled to an equitable share of the value of stock options in a divorce.
Stock options in a divorce are not easy to address during property division in a divorce. The value of stock options is not known until they are exercised. So, the potential future value of the stock options must be considered. Typically, divorcing spouses each receive a portion of the stock option's value once the employee who earned the stock option exercises the stock option. Another option is for divorcing spouses is to negotiate a property division arrangement that allows the employee to keep the stock options and the non-employee spouse to receive assets of equivalent value. For example, the employee spouse may keep the stock options while the other spouse keeps a greater share of the saving account balance
Source:
https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm
