Can Restricted Stock Units be Divided in a New Jersey Divorce?

At some large companies, employees may be compensation in ways beyond their typical salary. Some compensation packages can include additional forms of payment that encourage good performance overtime, such as restricted stock units (RSUs). When an employee with RSUs is going through a divorce, the value of these stocks is often not yet known. This can create a difficult situation when it comes time to divide assets in the divorce. Continue reading below to learn how this is done and contact an experienced New Jersey divorce attorney for assistance with your case.

How are RSUs Divided in a Divorce?

Recently, the New Jersey Appellate court made a ruling regarding how assets such as RSUs should be evaluated in a divorce. The case addressed the matter of whether stock options granted to a spouse during their marriage, but not exercisable until after their separation, are considered subject to equitable distribution in a divorce. The court found that a “future performance” portion of a restricted stock award was not considered marital property and therefore not subject to equitable distribution. This was due to the fact that most of the award was not fully vested until after the divorce was filed and the marriage was over. 

Along with this decision, the Appellate court established a method by which the assets can be divided. By law, stock awards can be subject to equitable distribution in the event that:

  • It has been made during the marriage and vests prior to the date of the divorce complaint
  • It is made during the marriage for work performed during the marriage, but becomes vested after the date of the divorce complaint
  • It is made during the marriage, but vests following the date of the divorce complaint. This is unless there is a material dispute of fact regarding the stock, either in whole or in part, that the RSUs were given in consideration of the future performance of the employee

The Appellate court also stated that the party who wants to exclude the assets is required to demonstrate that they were issued for work performance after the complaint for divorce was filed.

How Can I Protect my RSUs?

Those who have RSUs and are facing these situations should work to protect their assets. This can be done by hiring an effective divorce attorney who can provide them with the proper guidance during this time, such as informing them of the proper documentation to be prepared with. This can include:

  • Testimony of you and your employer
  • A copy of your stock plan
  • Correspondence and additional documentation related to the stock award
  • Vesting schedule
  • Stock plan statements

Contact our Firm

If you require strong legal representation for matters of divorce and family law in New Jersey, contact The Law Offices of Paone, Zaleski & Murphy to schedule a consultation with one of our experienced attorneys today.