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How is stock divided during a divorce?

On Behalf of | Sep 30, 2021 | Property Division |

Maryland couples approaching a divorce might have a number of questions as to how various assets are handled in a split. One of the more complicated things to handle is stocks.

Most couples come into stocks through their employers or through purchasing stocks together through a broker. If couples purchase stocks together while they’re married, then these stocks would have to be split fairly upon their divorce.

How are stock options determined?

Stock from someone’s company is usually given in two methods. The first is as a stock option, which gives the employee the right to buy company stock for a lower price at a future date. In this situation, more stock can be bought at a lower price without it having to decrease in value. However, having a stock option doesn’t mean that stock has been purchased.

Restricted stock is given to employees at no cost to them. Restricted stocks are harder to manage because they come with more rules and regulations as to how they can be transferred and sold.

During divorce proceedings, the stock options or restricted stocks are usually evaluated by the lawyers to determine their worth. With stock options that are given through an employer, the other spouse will have to make a case as to why they should have some of the stock options.

How are stock options split?

The way that stocks are split in a divorce depends on the type of stock it is. For stock options that haven’t been sold yet, there might be an agreement written up that says profit from the sale of those stocks must be split 50/50.

For restricted stock, it gets complicated. An agreement is still written up, but it will have a lot more terms and conditions as to what happens when the stock finally can be sold and if anything changes before that point.

Regardless of how many assets need to be divided or their value, a couple is responsible for fairly splitting their property. Stocks make a divorce more complex, but handling their division properly is often essential to a solid financial future for both spouses.

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