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Are Stock Options Marital Property?

The short answer to the question posed above is: it depends. Depending on why the options were granted and when the options a exercisable by the employee spouse, stock options may indeed be deemed marital property subject to equitable division in Georgia.

Generally, stock options may be defined as a right given to an individual, such as an employee, by a corporation to purchase a set number of shares of that corporation’s stock during a specific time frame and at a fixed price. If an employee is granted stock options, that employee is not required to exercise the option to purchase the stock, but that employee has the freedom to choose whether to exercise the option. Primarily, there are three reasons why a corporation would grant stock options to an employee:

  1. To provide an incentive for the employee to remain with the company. An option granted for this purpose would represent compensation for future services;
  2. To attract new employees. If stock options are granted for this purpose, the employee is then usually paid below the going rate in return for a part of company’s future growth. Options granted in a circumstance such as this would generally represent deferred compensation for services rendered in the present.
  3. To give current employees a bonus or reward for good work in the past. If stock options are granted for this purpose, they would represent compensation for past services.

In equitable division states such as Georgia, stock options that are exercisable up to and upon the date the marriage ends may be viewed as marital property. Stock options that are not exercisable up to and upon the date the marriage ends are generally treated as separate property, and thus not subject to property division upon divorce. Put another way, stock options granted for past and present services may, depending on the specific circumstances of the case, be deemed marital property subject to property division upon divorce. On the other hand, options granted as an incentive for or compensation for future services are more likely to be deemed separate property upon divorce.

Because the classification of stock options, as marital or separate property, depends on the specific facts and circumstances of each case. Additionally, there is a complex calculation necessary to determine how stock options should be divided upon divorce should they be deemed marital property. With that said, it is important to seek the guidance of an Atlanta divorce attorney with the knowledge and skill necessary to ensure you are awardee a fair property settlement if you are seeking divorce.

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