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How do you handle stock options in divorce?

Stock options are actually one of the hardest things you deal with when dividing assets in divorce. According to Forbes, the first hurdle is the valuation problem. This is how much the stocks are actually worth. Stocks come in primarily two different forms. There are stocks in publicly traded companies and stocks from privately traded companies. Stocks from publicly traded companies are pretty easy because you just go to the stock ticker for that day and you look at what the value is for the stock.

For privately traded companies, that is impossible because there are no stock markets for that sort of thing. You have to actually go get economists to come in and tell you what the value of the stock is. That is problematic for a couple of reasons. First, it takes a long time and costs a lot of money. Second, the volatility of these stocks is pretty high. Their value can fluctuate quickly. So even if an economist says on December 1, the stock is worth this, on January 1, it may be something completely and totally different.

The other problem is the vesting problem. Companies will give stock to employees, but they almost never give 100% of the stock at any given time. What they do is they give stock and then they put you on a vesting schedule. So, in 3-5 years, you will have 100% of the stock. This poses a problem because if you have 20% of stock, but you do not have the other 80%, how are you going to sell that? What are you going to do if you divorce? An attorney can help you decipher the intricacies of dividing stock options during a divorce.