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Divorce And Executive Compensation

On Behalf of | Aug 6, 2021 | Divorce |

Indiana divorces involving executives is not as simple as other divorces. This is because many assets are involved, including intangible ones like stock options, restricted stock units and awards, commissions, tax-deferred compensation, and other perks. Read on to find out what you need to know about how these items will impact your situation.

Divorce In Indiana

Indiana is an equitable division state; therefore, the court will separate all your marital property in the way they deem fairest. Factors that the court may consider to divide your assets fairly include the economic circumstance of each spouse with the intention of making sure your spouse still gets the life they were accustomed to in the marriage and the contribution you all had on acquiring your assets. And, this division extends beyond the physical assets like your house, vehicles, and businesses to intangible assets like your stock options, awards, and units.

Dividing Executive Compensation

The first thing the court does when dividing your property in a divorce is determining your separate and marital property. Your marital property in Indiana is anything you earned or acquired while you were married. So, if your employer awarded you the compensations packages while you were married, they will be subject to division.

It is also important to note that if your employer awarded you the compensation packages for your services before your marriage, that award becomes separate property. But, if your spouse helps you invest your award or does anything to increase its value, it will become marital property through commingling.

After determining which part is marital, the next step will be valuing your incentives at the time of your divorce. First, the court must review the incentive plan of your stock options, considering its vesting period, liquidity, and if it is possible for you to transfer it to your spouse. Some compensations packages come with conditions that make it challenging to split upon divorce.