Speak with one of our attorneys today: 509-392-8252
Our Focus Is Family Law
Our attorneys have devoted their careers to achieving
excellence in the area of family law.
Our attorneys have devoted their careers to achieving excellence in the area of family law.

How stock options are divided in a divorce

On Behalf of | Nov 9, 2023 | Divorce

Almost anything that was accumulated during your marriage could be considered part of the marital estate. Therefore, if your spouse was granted stock options by an employer, those options could be included as part of a Washington divorce settlement assuming that it wasn’t specifically excluded by a prenuptial agreement. However, you may need to do some work to determine just how much those options are worth.

Stock options explained

A stock option gives the holder the right to buy a stock at a defined price at a later date. Typically, companies will make employees wait several months or years before they are allowed to exercise their options. The employee hopes that the actual stock price is higher than the price of the option when exercising it. If the option price is higher than the actual price, the option is worthless and will likely be declined.

Accounting for stock options

The hardest part about accounting for stock options in a divorce settlement is that you can’t know how much they’ll be worth until they are exercised. Therefore, you could be negotiating for half of something that is worth millions or half of something that is worthless. You can protect yourself by negotiating a set value for the options or by exchanging your right to the options for something else that you have your eye on. Of course, you can always agree to receive a percentage of their value if that’s what you think you deserve.

Property division in a divorce may be accomplished through negotiations, a prenuptial agreement or by taking the case to court. However, reaching a consensus outside of court is generally faster, less expensive and more convenient if you share kids with your spouse as it shields them from the proceedings.