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Frequently Asked Questions (“FAQ”)
on Stock Options

Law with McGraw: Answers on Stock Options & Support Payments

McGraw Law P.C. provides answers to questions that many clients ask an attorney about the impact of stock options on various support payments. Do you need more information on how stock options might affect child or spousal support payments? Call McGraw Law P.C. today at (540) 904-5704 or message us online.

Q: How Do Stock Options Impact Alimony, Separate Maintenance and Child Support?

A: Employee stock options are an important part of many employees’ total compensation package. In some industries, it can be the most important element.

The first issue a court faces is whether the stock options are property, or a combination of property and income.

State laws and courts divide the property the couple has earned during the marriage in a divorce. It is 50-50 if the couple lives in a community property state or based on “fair distribution” or comparable approaches in other states. If the husband grants the stock options for 1,000 shares of his employer’s stock, the husband would argue that he has given his wife half the property and she is not entitled to anything more based on his options.

The wife would also argue that the stock options also represent income, and he could realize the value by selling them. She would point out that many employers issue stock options as a form of compensation, and she and the children should enjoy that form of income as well. She would argue, not only the value of the old options he holds, but also the value from likely future grants of options should be taken into account.

Specific analysis of stock options would need to be determined by qualified experts. The subject of stock options and income or losses from such financial activity are important factors to review with an attorney in order to protect your rights relating to support payments.