Any RSUs earned during a marriage are community property. Unless a prenuptial agreement specifies otherwise, they will be divided during a divorce action.
Are stocks marital property?
Marital Versus Separate Stock Options in California If you receive stock from your employer and that stock vests while you are married, it is community property. Since you did acquire the stock option during the marriage, it is still community property and you may still have to award a portion to your spouse.
What happens to RSU if stock splits?
A split (forward or reverse) does not affect the total value of the RSU, as in this case, the market value of the stock before the split will be multiplied by a factor of eight when the reverse split occurs.
How does RSU vesting work in a divorce?
First, vesting is contingent on the employee spouse staying with the company for several years. If the employee leaves or is terminated, those RSU grants have no value. Parties can consider RSUs fully earned marital property based on the date the RSU was granted.
Can a spouse Cut you a check for RSUs?
If your spouse cuts you a check for the value of the options and RSUs now, you may miss out on future gains, especially if the company is still in the startup phase. However, most startups fail miserably, so by getting the value of the options upfront, you are also eliminating the risk of future drops in value.
What to do with restricted stock units after a divorce?
If the employee wants to keep the RSUs, then they can negotiate an equitable trade-off based on the current value of the RSUs. The other option is the split the present value of the stock, and sell half, which is given to the non-employee spouse. Dividing RSUs after a divorce is especially relevant in California.
How is the marital portion of a RSUs determined?
Before a proper division can take place, there will need to be a determination of what part of the RSUs is marital property vs. separate property. Laws will vary from state to state, but no matter where you live, determining the marital portion of RSUs can be complicated. Part of this depends on the property division laws in your state.
