When one partner in a divorce in Florida is wealthy and holds complex financial assets, the process of understanding, unwinding and dividing those assets can be a significant challenge. One of the trickiest parts is executive compensation, which often entails stock options and other exotic instruments.
Stocks
Stock options can be valuable if the stock in the company has gone up over time, but there are restrictions and complications attached to them. First of all, stock options usually have a vesting period. This can be as long as five years. During that time, the stock options cannot be exercised, so they do not have any liquid cash value. It is often impossible for them to be transferred to someone else before they are vested. In a divorce, that usually means they need to be placed into a trust that benefits the other spouse until they can be vested.
Taxes
The other tricky aspect is the taxation. The way to profit from vested stock options is to exercise them and then sell the stock, pocketing the difference between the value of the options at the time they were awarded and the current price of the stock. Then, taxes are due on that income. Usually, it is the original owner who pays those taxes, even though the other spouse is the one who profits from the options. This is just one aspect of how complex high-asset divorce can be.
It can be an exhaustive process to find and manage all assets that a couple must divide in a high-net-worth divorce. If one or both spouses have complex finances, they need to be prepared for a longer divorce process.
