April 7, 2011

How Are Stock Options Divided in Oregon Divorce Cases?

As part of our Portland Oregon Divorce practice, we see a lot of people considering divorce that have stock option grants. There is a lot of confusion in the public about whether or not options are property that can be divided in divorce, and how options are divided.

From the court’s perspective, option grants that occur during the marriage are marital assets (see our post Divorce Property Division 101.)  How options are divided can depend on when the options were granted in the course of the marriage, and what the purpose was behind the option grant. Generally, options that are granted and vest during the marriage are subject to equal division.  Options that are granted, are for the purpose of rewarding past performance,  and have not vested at the time of the divorce are generally divided using the “time rule,” giving a party a progressively smaller percentage  of options that vest farther from the divorce date.  A court may exclude from division options that are unvested at the time of the divorce and were granted for the purpose of  providing a future incentive for the employee, because there has been no contribution to the acquisition of the options by the non-receiving spouse.

For many couples option grants are a significant or the most significant asset in the marriage. The division of options can be complex, and arguments exist to include them or exclude them from the division of marital property. If your divorce case involves stock options, you shoudl consult with an experienced family law attorney. The lawyers at Stephens & Margolin LLP have substantial  experience assisting clients in cases involging option division.