Companies offer a variety of benefits and compensation options to try to attract and retain employees. One of these is restricted stock units, which are issued to employees through a vesting plan after they meet specific work milestones. These give employees interest in the equity of the company they’re working for, but those units don’t have any actual value until they’re vested.
Because restricted stock units are only considered income once they’re actually vested, they create a challenge during a divorce. New York follows equitable distribution rules, which means that marital assets are split fairly. Even though these units may not vest until after the divorce, they may still be required marital property.
Method of division for restricted stock units
One common method of division is the “time rule,” which considers when the units were granted to determine if they’re part of the marital assets. Other factors that might be considered include how long the marriage lasted and when the units are due to vest.
Another consideration is whether the units were intended as compensation for past work, which will make them marital property, or if they were considered for future performance, which makes them separate property. Married property would have to be divided, but separate property would remain with the employee.
Anyone who’s going through a complex divorce that includes considerable assets and ones that are a bit unusual. Learning the options that are available and how each one can impact you now and into the future is critical. It may be best to work with someone familiar with these matters so they can help you to determine how to proceed.