Handling Tricky Stock Option Divisions
Our divorce lawyers in Connecticut are often asked about dividing certain stock options or dividing stocks with deferred payment plans. While many employers offer IRAs or other types of retirement accounts for their employees, some companies instead offer stock options to workers.
Determining Stock Value
In many cases, you can determine the value of the stock by looking at the market price on a specific date. However, not all stocks are publicly traded, which can complicate the procedure for calculating the value. While you might not know the exact value of the stock, there are ways to address this issue. In order to avoid this problem, some companies provide regular updates of the stock value and give this information to their employees periodically, usually once a year, which can be used to determine stock worth.
Considerations When Stock Ownership Is High
If the person’s stock ownership is quite low, such as 5 to 10%, you will likely be able to accept the stocks at face value. However, if the employee owns a significant amount of stocks, such as 40% or more, the stockholder probably has a partial interest in or even control of the company. In that case, the value increases because the company needs to be looked at holistically in terms of how much the business is worth. In these situations, an accountant, along with input from our divorce lawyers in Connecticut, can provide further guidance on valuation.
Deferred And Other Complex Payment Options
Your employer might set up a future payment plan as a retirement benefit. For example, you might receive $8,000 annually for 15 years at retirement. Other companies might choose different ways of deferred compensation, which could be equally complex. Our divorce lawyers in Connecticut can provide you with additional counsel on determining value.
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