Divorce is a complicated process, but can quickly become overwhelming when looking at the assets to be distributed. Many people think of major property, like homes, boats, and cars, and assets like checking and savings accounts, but few consider the impact of divorce on assets like stock options, golden parachutes, and stock options. Things like this require you to really get into the nitty gritty, but are critical to consider if you want to make sure that your divorce settlement will be fair and that you receive an equitable share of the marital assets that you have contributed to acquiring and accumulating.
Retirement Programs, Stock Options, and Golden Parachutes
When it comes to determining how to distribute assets in a divorce, the most important consideration is whether the property and assets constitute marital or separate property. While you may think that contributions made to your own retirement account would constitute separate property, any contributions that you made to a retirement account while married will be considered marital assets, and your spouse will be entitled to an equitable share. Because Illinois is an equitable distribution state, your spouse will not automatically be entitled to half of the amount that you contributed during the course of the marriage, but to whatever percentage the judge determines to be equitable based on a number of factors.
When it comes to stock options, these will also be considered marital property if they were acquired during the course of the marriage. Generally, the employee who has the stock options will retain them and pay their spouse the value equivalent to the spouse’s equitable share. If your spouse has a golden parachute (essentially a future severance package from their employer) and they have cashed it in during the course of the marriage, you will be entitled to your equitable share of the assets. On the other hand, if they have not cashed it in it can be a more complex process. You will need to work with a lawyer to determine whether the golden parachute benefits were earned during the course of a marriage and how to get your equitable share.
Model Family
Looking at our model family, the wife has a lucrative corporate job, so we can assume that she has a good pension and a golden parachute, as well as stock options. The husband also has a successful business and has likely contributed to a retirement program, such as a 401(k). If the spouses (or a judge) determine that an equitable share would be 50% since both spouses have made major contributions to the marriage and now have comparable incomes, the husband would be entitled to 50% of the wife’s golden parachute benefits since they were earned during the course of the marriage, as well as the value of 50% of her stock options. On the other hand, the wife would be entitled to 50% of the contributions that the husband made to his 401(k) during the course of the marriage. Of course, the couple would be free to negotiate their own agreement and may elect not to divide or share any of these assets.
Contact Glasgow & Olsson
If you are going through a divorce in Schaumburg, Illinois, the experienced divorce attorneys at Glasgow & Olsson can ensure that you get the settlement that you deserve. Contact Glasgow & Olsson today to schedule a consultation.