Stock & Retirement Fund Division

Experienced Atlanta Divorce Attorney

The law in Georgia is clear that vested stock options earned during the marriage are considered marital property, and that they are subject to equitable distribution (equitable distribution means they can be distributed to each party, but it is within the discretion of the court as what percentage each party will get).  The issue will be resolved on an "equitable" basis given all the factors around the marriage and divorce.

The issue is much murkier however when it comes to unvested stock options.  This is because an unvested stock option is subject to future contingencies, and may never vest at all.  On the one hand it may take years of future employment and performance following the divorce for the contingencies to be satisfied to earn the stock options.  On the other hand, most of the contingencies may have already been satisfied prior to the divorce and it may not be fair and equitable to completely deny the other spouse any interest in these unvested stock options simply because they are presently unvested, but may vest shortly following the divorce, and may not require a lot of effort by the option holding spouse to meet any remaining contingencies.

This can be an extremely important issue, worth a lot of money.  However, for such an important issue, you may find it strange that Georgia has not entirely settled the issue as to whether or not these unvested stock options are marital property or not.  Therefore it comes down to the skill and persuasiveness of the arguing the issue as to whether or not the unvested options will or will not be made marital property by the court, or in negotiations with your spouse whether your spouse will concede on this issue.  It comes down to the facts, and how the facts are marshaled and argued.

What the Law Says About Stocks

As for the law, the closest Georgia has come to deciding this issue involves a case called Courtney, which involved a retirement plan (not stock options).  In Courtney, the husband's receipt of certain future retirement benefits were made contingent on the happening of future events (i.e., they were unvested until the future contingent events occurred).  The husband's contingent rights to these retirement benefits were obtained during the marriage, but the future contingent events would not occur (if at all) until after the divorce.  This is a situation that is very analogous to unvested stock options. 

The court held that the "retirement plan, while admittedly unvested, is nevertheless an important contractual right, which will become a reality upon satisfaction of certain conditions. Thus, it is far less speculative in nature than the possibility of an inheritance, and we cannot agree with the husband that it should play no part in the jury's consideration of the distribution of the marital property…{therefore} we hold that insofar as they are acquired during the marriage, unvested retirement benefits are martial property subject to equitable division."

If one were to apply this case to unvested stock options, one can argue that the unvested stock options, like the unvested retirement plan, should also be considered marital property, and therefore the option holding spouse should be entitled to a cut of the unvested stock options, should said options ever vest.  Or at least that is how one might want to argue the issue if your spouse has significant unvested stock options.  But that is only one side of the argument.  It can also be equally argued, depending on the specific facts of the case, that Courtney does not apply, and that the unvested options are too contingent to be marital property, that the unvested stock options were awarded largely for future work performance, not past work performance.  And this future work that will be required to obtain the vesting of the stock options will be work that your spouse will have had nothing to do with. 

What we can take from this is that unvested stock options may or may not be marital property in the state of Georgia.  The truth is, nobody really knows.  The more the award of unvested stock options was based upon work done during the marriage, the more likely it will be found that the unvested stock options are marital property subject to equitable distribution.  On the other hand, the more the unvested options were awarded for future work, the less likely the options will be considered marital property subject to equitable distribution.  There is no solid rule, but that is the gist of the argument to be made on both sides of the issue.   

If you have any questions about this issue or any other family law matter I would be happy to speak with you about it.  To schedule a consultation, please contact my office at (770) 594-8309.