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Divorce and Division of Stock Options and Restricted Stock Units

Identifying, Classifying, and Valuing Options and RSUs for Equitable Distribution and/or Income Availability

A live 90-minute CLE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Wednesday, December 11, 2024

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926
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This CLE course will prepare family law practitioners and financial professionals to better represent litigants in identifying, classifying, and valuing stock options and restricted stock units (RSUs) for equitable distribution and income availability upon divorce or in the context of post-judgment modification.

Description

Addressing stock option issues in a divorce setting often challenges divorce counsel to identify aspects of the option as vested or unvested, the option's express terms, and whether it is the result of marital effort awarded for work associated with the efforts of both spouses during the marriage.

The attorney and financial professional must determine whether a particular stock option can be characterized as a marital asset or income in the context of a divorce or post-judgment litigation. After making such a determination, the practitioner must prepare to value that stock option.

Such specified valuation provides the practitioner with even more challenges as several different valuation methods exist, all of which may be applicable, depending on the particular circumstances.

Listen as our panel, comprised of a family law attorney and a Certified Financial Planner (CFP®), discuss and explain the different types of stock options and RSUs, the identification, consideration, and distribution of these stock options and RSUs in the marital context, and the appropriate valuation methods for such stock options in the divorce and post-divorce context. The panel will identify gray areas requiring specific attention to the details and analysis of the nature and purpose of the stock option to avoid inappropriate distribution or inaccurate assumptions regarding pre-marital, marital, or post-marital assets and income.

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Outline

  1. Accounting/tax issues
    1. Overview of employee stock options
      1. ISO vs. NQSOs
      2. RSUs
      3. Tax implications
    2. Valuation issues
      1. Intrinsic value
      2. Mathematically derived values
    3. Matrimonial/legal issues
      1. Case law history
      2. Deferred distribution methods
      3. Present valuation with offset
      4. The value used for support
      5. Defining if an option is subject to distribution
      6. Recent developments
    4. Case law
    5. Distribution (two-step process)
      1. Determine the "marital portion" subject to equitable distribution
        1. Distribute vested options only
        2. Present evidence of reasoning behind options awards to determine whether earned income occurred "during the marriage" or "through marital efforts"
        3. Coverture fraction/time rule
      2. Method of distribution of "marital portion"
        1. Valuation and offset
      3. Intrinsic value
      4. Black-Scholes method of valuation
        1. In-kind distribution
        2. Transfer of title
        3. Trust device
    6. Stock options as income for support
      1. Previously distributed options
      2. Existing but undistributed options
      3. Projection of future income from past awards
    7. Other issues to consider
      1. Options to be expensed by corporations
      2. Sarbanes-Oxley Act of 2002
      3. Revenue Ruling 2002-22

Benefits

The panel will review these and other high priority issues:

  • What is the difference between a vested and unvested stock option?
  • How are different stock options identified?
  • What "time rules" are used in various venues?
  • What are the different valuation methods to value a stock option--and when should they be applied?
  • When should stock options be considered as marital assets subject to equitable distribution, and under what circumstances can and/or should stock options be considered income?
  • How does one equitably distribute a stock option?
  • What challenges do RSUs present that are different than stock options?

Faculty

Loesch, Scott
Scott Loesch, CPA/ABV, CFE
Director, Valuation Forensics & Litigation Services
Marcum

Mr. Loesch is involved in the valuation of business interests for a variety of purposes including matrimonial...  |  Read More

Zielinski, Alynne
Alynne D. Zielinski, MBA, CFP, CDFA
Director of Financial Planning & Advisor Experience
Marcum Wealth

Ms. Zielinski is the Director of Financial Planning & Advisor Experience (AdvisorX) for Marcum Wealth. With over...  |  Read More

Attend on December 11

Cannot Attend December 11?

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

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