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Unvested Stock: Retirement Assets & Equitable Distribution

By Jamie Berger, Esq.

Unvested Stock and Equitable Distribution Attorneys Morristown NJ

Representing Clients across Randolph, Madison, Morristown, Florham Park, Denville and across Morris County, New Jersey

Unvested Stock and Equitable Distribution Attorneys Morristown NJOften considered the most time-consuming and demanding aspect of any divorce process, the division of assets must be completed before a Morris County divorce can be granted. Whether you and your partner are a working-class or high net-worth couple, both of you must decide which assets and debts were accrued over the course of your marriage and accurately value and divide all of them in accordance with New Jersey equitable distribution laws. 

As a part of full financial disclosure, each party MUST file a Case Information Statement for financial discovery and provide a full and accurate picture of the financial standing of both parties individually and as a married couple. 

Amongst the many assets which must be divided through equitable distribution, retirement assets can be amongst the most valuable and least understood. Even seemingly straightforward company 401(k)s, personal IRAs, awards of stock can be controversial, highly contested, and often challenging to lawfully distribute between divorcing couples. It can also be particularly complex if the stock awards are “restricted” (RSA) or have not yet vested and their value is unknown. Vested stock or benefits are a form of company compensation that you own, and remain yours even if you are fired or you quit. Commonly used by startups as part of a signing bonus incentive, they can also consist of contributions to a retirement plan.

The retirement asset division attorneys of Jacobs Berger, LLC understand that the regulations and red tape surrounding many retirement assets can be downright confusing. We take pride in walking our clients through all aspects of the divorce process, including complex retirement asset division. Our divorce and family law attorneys take pride in providing personalized and compassionate legal services to our clients in New Jersey towns across Randolph, Madison, Morristown, Florham Park, Rockaway, and the greater Morris County region.

Call our office today for a strategic planning session regarding any divorce property division concerns including dividing complex assetshigh net-worth divorcemarital debt, and more.

Significance of Unvested Stock Based on Past, Present or Future Performance in NJ

In New Jersey as well as the majority of other states, unvested stock options are property subject to distribution in marital dissolution proceedings. In the 1995 landmark case of Pascale v. Pascale, the New Jersey Supreme Court held that stock options awarded after a marriage has terminated, but received as a result of efforts expended during the marriage, are subject to equitable distribution. 

Today most courts have learned that employee stock options are not usually granted for any one reason, and could be compensation for past, present, and future services. As a result, courts seek additional information or guidelines to decide the distributable share. 

In M.G. v S.M., the New Jersey Appellate Court recently addressed the issue of whether stock options granted to a spouse during the course of the marriage, but not exercisable until after the date of separation, constitutes marital property to be divided during the divorce. They reversed the earlier trial court decision citing Pascale v. Pascale and granting the wife 50% of the stock awards. The court found that a “future performance” portion of the restricted stock award was not subject to equitable distribution because much of the award was not fully vested until after the divorce complaint was filed and after the marriage ended.

To explain their findings, the justices divided the stocks into three (3) categories:

  • stocks awarded during the marriage & vesting prior to the divorce filing
  • stocks awarded during the marriage & based on previous and current job performance during the marriage, even if they vest(ed) after the divorce filing, and
  • unvested stocks awarded during the marriage but which vest with future work-related performance.

Protecting Your Restricted Stock Awards and Retirement Assets

Problems generally arise when the reasons for the stock awards are unclear, if they are unvested, should be treated as either income and/or an asset, and if they are based on past, present or future performance.

The Appellate Court in M.G. v S.M. held that the husband produced sufficient evidence (i.e., testimony, stock plan, award correspondence, and vesting schedules) against the presumption that the vested awards were subject to equitable distribution. Testimony and documentation supported the husband’s claim that the unvested stock awards were for future services, not attributable to the marriage, and not subject to equitable distribution.

If you are in a similar situation, consult an experienced attorney knowledgeable about this unique kind of assets, who can advise you about how having the following documentation may help protect your assets and retain your stock awards:

  • testimony (yours and a representative of your employer)
  • a copy of your stock plan
  • correspondence and additional documentation related to the stock award
  • vesting schedule 
  • stock plan statements

Contact our Morristown Retirement Asset Division Lawyers Today

At Jacobs Berger, LLC our Morristown equitable retirement asset division lawyers see our role in the divorce process as architects of newly formed family units. While money is only one aspect of your divorce, a solid financial foundation is an essential part of moving forward with your life. Our firm believes each case we take is an opportunity to help reshape our clients’ futures.

We will take the time to understand your unique needs and concerns before offering legal advice, just as we have done for innumerable clients in New Jersey towns such as Randolph, Morristown, East Hanover, Rockaway, Madison, Dover, Denville, Morris County, and throughout New Jersey.

Contact us online or through our Morristown offices by calling (973) 710-4366 today for a strategic planning session regarding equitable distribution of retirement assets and unvested stocks in your divorce.

Contact Our Morristown Attorneys Today

At Jacobs Berger, our attorneys are experienced in protecting our clients across Madison, Randolph, Tewksbury, Morristown, and the greater Morris County area in all family law-related issues.

To schedule a strategic planning session with one of our experienced team members regarding your particular case, please contact us online or through our Morristown, NJ office at (973) 354-4506.