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Californians may need to address stock options in a divorce

Dividing assets and debts during a divorce can be daunting for people in the East Bay area. California residents who divorce are generally entitled to an equitable distribution of marital property. If a couple owns a pair of late-model cars that are not encumbered by loans, determining an equitable distribution of the property may not seem daunting on the surface, but arriving at an equitable agreement may take some negotiation.

Many people in Northern California have more complex asset structures than it may seem on the surface as well. Couples may have purchased a home during a marriage. Maybe a vacation property is involved. Working adults may have amassed significant funds in retirement accounts.

But, it is important to note that people may have assets that are not as obvious and can be overlooked in a divorce. California family law attorneys are aware that valuation issues can erupt in many divorces, but an equitable division of the marital estate may also require an investigation into what assets exist.

We have previously discussed using forensic accounting techniques to locate the existence of potentially hidden assets, as well as in determining the value of the assets. But some items may not be as obvious from something like perusing old tax returns.

Take for instance the ideas of company stock options and restricted stocks. These types of vehicles may not show up in many types of paperwork, according to a recent article in Forbes. For example, they generally are not included with tax records, unless a person has actually exercised an option.

Once it is determined that these kinds of investment vehicles exist, it may be necessary to determine whether they have vested. Valuation of the assets may also lead to dispute, especially if the business is privately held.

The rules that apply in the legal process can be complex, but determining the full extent of the marital estate may be as important as determining how assets and debts should be divided.

Source: Forbes, “Dividing Stock Options And Restricted Stock In Divorce," Jeff Landers, March 19, 2014

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