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What do I Need to Know About Dividing Restricted Stock Units in a New Jersey Divorce?

There are instances in which an employee of a large company may receive compensation in ways beyond their regular salary. Sometimes, a compensation package may include restricted stock units (RSUs) as additional compensation. When an employee who has RSUs is going through a divorce, they may wonder whether or not they are subject to equitable distribution. Continue reading below to learn more and contact an experienced New Jersey divorce attorney for assistance with your case.

How are RSUs Divided in a Divorce?

In recent years, the New Jersey Appellate court determined how assets such as RSUs should be evaluated in a divorce. The case addressed the matter of whether stock options granted to a spouse during their marriage, but not exercisable until after their divorce, are subject to equitable distribution. The court ruled that a “future performance” of an RSU is not considered marital property. This means it would not be subject to equitable distribution, due to the fact that most of the award would not be fully vested until after the divorce was filed and the marriage was over. 

However, the Appellate court did establish situations in which the assets can be divided. The court stated stock awards can be subject to equitable distribution if:

  • It has been made during the marriage and vests prior to the date of the divorce complaint
  • It is made during the marriage for work performed during the marriage, but becomes vested after the date of the divorce complaint
  • It is made during the marriage, but vests following the date of the divorce complaint. This is unless there is a material dispute of fact regarding the stock, either in whole or in part, that the RSUs were given in consideration of the future performance of the employee

How Can I Protect my RSUs?

Individuals with stock options who are facing these situations should protect their assets. That is why it is beneficial to hire a skilled divorce attorney who can help to prepare them for the proceedings. This can involve preparing the following documentation:

  • Testimony of you and your employer
  • A copy of your stock plan
  • Correspondence and additional documentation related to the stock award
  • Vesting schedule
  • Stock plan statements

Contact our Firm

If you need an experienced legal team to guide you through your divorce, contact Townsend, Tomaio & Newmark L.L.C today.