- RSU (Restricted Stock Units) have no tangible value until vesting is complete but do give an employee valuable interest in company stock. You may wonder how RSUs are divided in divorce when they haven't yet been vested. This is critical to understand and discuss with counsel. You need to know what exposure you have in a divorce, how best to protect your assets, and what is subject to division.
- IPO (Initial Public Offering) refers to the process a of private corporation offering shares to the public in a new stock issuance. If a company you own stock in goes public or is expected to go public, an IPO is very important to take into account because it plays an extremely significant role in determining net worth.
- Can an influx of wealth lead to divorce? It is widely known that financial struggles are commonly cited as a reason for divorce, but what about when a couple has a sudden significant increase in wealth? Opinions vary here, but many family law attorneys notice that when people have the means to divorce they are more likely to do so. Some say divorces are more likely to occur after an IPO, because spouses feel less financially dependent on each other and freer to make the break one partner may have been thinking of making. Others say there is no correlation and suggest that a sudden cash flow may help to stabilize a struggling marriage. This all depends on the individual relationship! An IPO or stock grant is also cause for consideration of pre or post-nuptial agreement or cohabitation agreement for unmarried partners, if there is not one in place. This can help alleviate significant questions about asset division in the case on a divorce involving IT professionals.
- Timing: When it comes to divorce and looking toward division of community property, timing can be especially important for tech professionals. This is due to the way various variables may have significant impact on the calculation of assets. Here are some examples:
- Either the employee spouse or the non-employee spouse may strategically want to wait to file for divorce until an IPO occurs if a company is expected to go public, depending on what is predicted to happen with the stock upon IPO.
- If a spouse is up for a big promotion or expected to relocate to a higher paying position in the tech world, timing may play a role in when one chooses to file for divorce. Conversely, timing may play a role whether it be before or after relocation or promotion, in determining assets for division.
- Timing also comes into play around bonuses, in terms of determining whether the employee's bonus is considered community property. The reason for the bonus factors in as well, whether it is delayed compensation, bonus for a job well done prior to separation or if it is incentive for the year ahead after a couple is already separated. These are among the multiple complex factors that would help determine if/how a bonus would be divided among divorcing spouses.
- A time-weighted formula is used to help determine the community vs separate portions of RSUs, making it not a simple answer and highlighting the need to work closely with a skillful family law attorney around these complex questions. There are a number of issues to consider for anyone who is embarking on a “high asset divorce” process but for tech professionals, these specific considerations are among some of the important aspects of divorce IT professionals need to work through with skilled legal counsel.
Involve Legal Representation
We recognize the high-stakes and complex nature of this type of divorce process and want to put you in the best possible position. Your protection and best interests are our priority.
Dellino Law Group has family law attorneys that are very experienced in working with tech professionals. We provide high quality legal representation in IT divorce and high asset divorce cases. Strong advocacy and complex strategizing are where we excel, and we have the expertise and resources to help you reach the best possible outcome in your case.
Contact us today by filling out our quick online form, or give us a call at 206-659-6839 to let us know how we can help.