Division of Stock Options in Ohio Divorce
When a marriage ends in Ohio, the process of dividing marital assets can be complex, particularly when it involves stock options. Stock options are a form of deferred compensation that gives an employee the right to purchase company stock at a predetermined price. In the context of divorce, these assets must be evaluated and divided equitably between the parties.
In Ohio, stock options granted during the marriage are generally considered marital property. However, the division is not always straightforward. Ohio courts will consider several factors to determine how stock options should be divided:
- Vesting Schedule: Options that are vested (meaning the employee has the right to exercise them) during the marriage are typically considered marital property. For options that vest after the date of separation, a formula or percentage may be used to determine what portion is considered marital property.
- Intent: The purpose for which the options were granted can influence their classification. For instance, if they were intended as compensation for past, present, or future services during the marriage, they may be deemed marital property.
- Valuation: Determining the value of stock options can be complicated. Courts may require expert valuation to ascertain their current and potential future value.
One famous example illustrating complexities in dividing stock options is the case of Wendt v. Wendt, where Gary Wendt, CEO of GE Capital, went through a contentious divorce that involved significant stock options. This case highlighted issues like potential value versus actual present value and how speculative value should be treated in divorce settlements.
Division of Deferred Compensation in Ohio Divorce
Deferred compensation plans like pensions, retirement accounts, and other benefits accrued during a marriage are also subject to division upon divorce in Ohio. These assets are typically divided using a Qualified Domestic Relations Order (QDRO), which recognizes both spouses' legal interest in the deferred compensation.
The division process involves:
- Determining Marital vs. Separate Property: Only the portion of deferred compensation accumulated during the marriage is divisible. This may require tracing funds to distinguish between marital and separate property.
- Valuation: Like stock options, determining the present value of deferred compensation requires expert analysis, especially for benefits that will not be received until a future date.
- Distribution: The QDRO outlines how deferred compensation will be paid out to each party. This can involve lump-sum payments or ongoing distributions.
An understanding of both federal and state laws is crucial when dividing these types of assets in an Ohio divorce. For personalized guidance, it is advised to consult with a knowledgeable family law attorney who can navigate these complex issues.