Divorcing an executive in New York is quite complicated and more complex than you may expect. This is because many factors are at stake, like stock options, restricted stocks units, or other assets that determine the compensation split you will receive. Here is what you should know to make the process a lot easier.
Executive compensation in a divorce
When you or your partner is an executive at a company or corporation, often, you will receive company stocks as part of the compensation for your services. Or it may be a way of incentivizing you, boosting your morale, or motivating you. When going through a divorce, these stocks you received will be divided equitably between you and your partner because New York state law considers them to be marital property.
Separating executive compensation
During the divorce, work closely with your attorney or a plan administrator to determine the type of executive compensation you will be splitting with your partner. Then look for factors that affect that asset, such as the period you will have to wait before you exercise it (vesting period) and how it can be transferred, used, or even taxed. Having this knowledge will help you make a better decision on handling such assets during the divorce.
Also, you must keep in mind that New York is an equitable state. This means that you won’t receive half of the executive compensation. Rather, the judge will determine a fair distribution based on the underlying factors of your divorce. If you signed a prenuptial agreement, the court could also consider the terms you agreed upon for your marriage.
Types of executive compensation
There are two main kinds of executive compensation. They are:
• Stock options that allow you to buy a specific number of shares at a discounted price within a particular time frame
• Restricted stocks awards and units, which are actual shares of the company or corporation your partner is working at
Separating executive compensation during a divorce can get messy. For instance, you risk losing the entire value if your partner fails to meet his or her benchmark performance or if he or she quits. So it is important to ensure that you know what you are getting into before agreeing to it.