Stock Options in Divorce
Many working spouses collect stock options during marriage (especially in Silicon Valley) as a form of compensation for employment. These options are considered community property if earned, vested, and exercised during marriage. Community property will normally be acquired from the date of marriage to the date of physical separation of the parties. Problems occur with regard to the allocation of stock options in divorce court, however, when the options are earned during marriage but their benefits are realized only after the couple separates. In this case, the community portion of the options must be allocated by the court. Several approaches have been utilized by the courts. See the cases below in Additional Sources of Information.