Executive Divorce in Downtown, OKC

Executives and other business professionals often receive not just payment for their services but also bonuses, stock options, and restricted stock units (RSUs). Dividing these assets upon divorce can be tricky. It’s important to understand how an executive divorce in downtown OKC works. You should always hire an Oklahoma City divorce attorney to help sort out the particulars of your situation, especially in a high asset divorce.

How RSUs and Stock Options Work

Let’s start from the beginning with a quick explanation of how RSUs and stock options function. To start, they are both forms of equity compensation, commonly given as performance bonuses to high-level executives.

RSUs, or restricted stock units, grant company shares upon the fulfillment of certain conditions. They’re often tied to continued performance or employment. Stock options give executives and other business professionals the right to buy company stock at the exercise price.

You might already see why these forms of equity compensation can complicate a divorce. Stock awards are often unvested during divorce proceedings, leaving the right to the shares or options contingent on future performance.

Common Division Approaches

Every divorce settlement is unique, but under executive divorce laws in OKC, certain approaches to dividing RSUs and stock options must be used to ensure an equitable division. They include:

• Deferred division. Under this division approach, the spouse holds the equity until it vests. They then transfer the agreed-upon portion of the money to the other spouse.
• Immediate offset. This approach allows one spouse to retain the equity while the other spouse receives an offsetting asset, such as additional cash from bank accounts or a larger share of other marital property.
• Hybrid approach. You can also combine deferred division with an immediate offset. Part of the equity will be offset immediately, and the remainder will be divided upon vesting.

Tax Consequences of RSU and Stock Option Division

Any tax implications must be considered when establishing a division agreement. Here’s what you should know about these forms of executive compensation:

• RSUs. The fair market value of an RSU is usually taxed as ordinary income. It’s the employee spouse who will owe the taxes, even if they choose to use a deferred division and give a portion of the shares to their ex-spouse.
• Stock options. With non-qualified stock options, it’s the spread between the exercise price and the market value of the stock at exercise that gets taxed.
• Transfers between spouses. Transferring equity in connection with a divorce is generally not a taxable event. However, there may be taxes due when the equity is exercised or sold.

Valuing Executive Bonuses

Executives working at local offices for large companies like Hobby Lobby and Devon Energy often receive bonuses in the form of RSUs or stock options. Almost all publicly traded companies offer senior executives bonuses that consist primarily of restricted stock: 88% offer restricted stock, 71% offer performance stock, and 40% offer stock options, compared to just 10% offering cash bonuses.

If you plan to use the immediate offset method for dividing RSUs and stock options, they’ll need to be valued accurately to ensure an equitable division. This can be challenging and usually requires the help of financial professionals.

To value RSUs, you’ll need to have:

• The plan document
• The award letter
• The grant schedule
• The annual benefits statement

You’ll need to provide these documents to a financial professional to get an accurate valuation. Keep in mind that RSUs can be considered marital property even if they were granted once the divorce process started. If, for example, RSUs were granted as a bonus for work performed during the marriage, they are usually considered marital property.

Work With a Lawyer Experienced in Executive Divorce

The team at Bundy Law has extensive experience handling high-asset executive divorces, including those that involve RSUs, stock options, and other non-traditional bonuses. You can trust us to provide legal guidance and advocacy for your financial interests during your divorce.

FAQs

How Are RSUs Divided in a Divorce?

RSUs are divided in a divorce by using a formula to determine the marital portion, valuing that portion, then splitting it equitably, usually via a buyout or deferred division. Vesting schedules and tax implications must be considered for fairness. It often takes the help of one or more professionals to divide RSUs in a divorce.

How Are Unvested Stock Options Treated in a Divorce?

Unvested stock options are usually treated as marital property in a divorce if they were granted during the marriage. This makes them subject to equitable division, which can be accomplished via buyouts or deferred payments. If options are granted after a separation, they are considered separate property. Lawyers can use tools such as deferred division agreements to ensure the non-employee spouse receives their fair share when the stock vests.

How Are Assets Divided in a Divorce in Oklahoma?

Assets are divided equitably in a divorce in Oklahoma. In practice, that usually means a 50/50 split. However, there are times when a judge will issue an order dividing property unevenly if they deem it more equitable. Courts consider everything from each spouse’s monetary and non-monetary contributions to the marriage to their financial positions post-divorce.

How Are Stock Certificates Divided at Divorce?

Stock certificates are usually divided as marital property at divorce. They can be divided through in-kind transfers to new accounts, selling them off and dividing the proceeds, or offsetting the stocks with other assets. Vested shares are usually divided equally. Unvested options may be subject to a deferred payout for the non-employee spouse to ensure equitable division.

Hire a Divorce Lawyer

If you’re a business professional planning an executive divorce in downtown OKC, you can’t afford to go through this difficult process alone. You need to hire a divorce lawyer. The team here at Bundy Law can help you with everything from OKC complex asset division to spousal support orders, and more. We have a comprehensive understanding of OKC divorce laws and can apply our knowledge to your case. Contact us to schedule an initial consultation today.