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FAMILY LAW... & MORE

How may New Jersey divide executive compensation in a divorce?

On Behalf of | May 24, 2021 | Property Division |

A divorce involving a highly compensated executive may entail dividing valuable stocks and other employer benefits provided as bonuses or incentives. Under New Jersey’s equitable distribution laws, you may have a right to receive a fair share of his or her compensation package as part of your divorce.

The time your spouse spent working at a company generally determines his or her vesting schedule. As reported by Kiplinger’s Personal Finance magazine, it may take between one and five years before an executive may exercise stock options or transfer restricted stocks.

How may the vesting period affect a divorce settlement?

If you married your spouse before he or she started working for a company, New Jersey may consider an incentive package as a marital asset. The value of stocks your spouse received from an employer during your marriage may divide fairly between both of you.

In some cases, stock options require an employee to meet certain conditions before exercising his or her right to receive the securities. When the vesting period for a restricted stock is set to occur in the future, you may need to negotiate with your spouse on a fair payout.

How may I receive a stock payment if a spouse has not yet vested?

Your soon-to-be ex-spouse may need to provide your fair share of a stock’s value when a vesting event or required performance occurred during your marriage. If your spouse has not yet met the conditions required for a full stock vesting, the court may not consider it as part of your marital assets.

At least 15 million employees have a company stock plan, and many spouses may not know about it, according to Kiplinger’s Personal Finance. If your spouse works at an executive-level position, he or she may need to include part of a stock-related compensation package in your settlement.