Stock Awards in a Divorce: Yours? Mine? It Depends…..

Oftentimes, you or your spouse receive stock awards from the employer. Those shares will vest over a period of years as opposed to all at once. The question then becomes, what happens to the stock awards which vest after a divorce complaint has been filed if the vesting depends upon you or your spouse’s efforts on the job after the filing? We know have an answer for you. The answer is…it depends.

A recent case from the Appellate Division now tells lawyers that they can argue that if the award was made during the marriage that their clients can keep them free and clear of the spouse’s claim if that stock was issued in whole or in part for future performance. In other words, the stock award must be made for services performed after the complaint for divorce was filed, for future services, and not a deferred compensation for prior efforts.

If you have stock awards, or you believe your spouse has them, you should find out if the stock was intended to vest due to future services and not prior services by looking at the stock plan and find out if the stock grants were designed to maintain a long term interest by the employee in the overall success of the company. Or, you need to determine whether the stock was intended to vest through mere continued employment without consideration of you or your spouse’s level of proficiency.

Date Published: December 27, 2018


Written by: Ronald Lieberman