Latest / BSPE Legal Marketing Podcast / How Are Stock Options, RSUs, and Deferred Compensation Handled in Divorce Mediation? - Juan Luciano

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How Are Stock Options, RSUs, and Deferred Compensation Handled in Divorce Mediation? - Juan Luciano · BSPE Legal Marketing Podcast

• 0:00
  How Are Stock Options, RSUs, and Deferred Compensation Handled in Divorce Mediation?
• 0:05
  When a marriage ends and one or both spouses hold stock options, RSUs, or deferred compensation, the financial stakes can be enormous and the legal rules are far more nuanced than most people realize.
• 0:18
  Under New York's equitable distribution statute, stock options, restricted stock units, and deferred compensation earned during a marriage are considered marital property, even if they have not yet vested at the time of divorce.
• 0:32
  Only the portion of an award that corresponds to work performed during the marriage is divisible, so grants issued before the wedding or tied to service after the divorce commencement date may remain separate property.
• 0:44
  Because most equity awards span both marital and post-marital periods, mediators and valuation professionals rely on a time-based formula called the coverture fraction to determine how much belongs to the marital estate.
• 0:58
  The New York Court of Appeals established in DeJesus v. DeJesus that unvested equity awards are marital property to the extent they compensate for services performed during the marriage.
• 1:10
  That landmark case drew an important distinction between grants that reward past work, which are largely marital, and retention-based grants tied to continued future employment, which are at least partly separate.
• 1:22
  Two grants with identical share counts can be treated very differently depending on whether the agreement describes the award as recognition for prior performance or as an incentive tied to continued employment going forward.
• 1:35
  For stock options, valuation typically begins with two dates on the grant agreement — the grant date and the vesting date — and may involve either intrinsic value or the Black-Scholes pricing model for unvested or volatile awards.
• 1:48
  Even underwater options, where the exercise price exceeds the current market price, can still carry value under Black-Scholes because the stock may rise before the option expires.
• 1:59
  The coverture fraction measures the marital share by dividing the months from the grant date to the divorce commencement date by the total months from the grant date to the vesting date.
• 2:09
  RSUs are simpler to value than options because they carry no exercise price, and the marital portion is generally calculated by multiplying the applicable share count by the share price, subject to tax adjustments.
• 2:22
  Couples handling RSUs in mediation often choose between dividing shares as they vest or offsetting the RSU value against another asset like home equity or a retirement account to avoid remaining financially entangled with a former spouse's employer.
• 2:37
  Vesting schedules, forfeiture risk, tax timing, and plan transfer restrictions all shape the final agreement, making careful documentation and financial analysis essential to reaching a fair outcome.
• 2:50
  Attorney Juan Luciano has focused exclusively on domestic relations and matrimonial matters since opening his divorce practice in 2013 and has practiced family law since his bar admission in 2005, bringing deep experience to every mediation.
• 3:06
  The law firm serves clients across the Bronx and surrounding New York City area in both English and Spanish, guiding spouses through the financial side of mediation with patience and clear explanations.
• 3:17
  Whether you are protecting your own equity awards or securing your fair share of a spouse's deferred compensation, having the right legal strategy from an experienced divorce lawyer is vital to your financial future.
• 3:29
  Call Juan Luciano Divorce Lawyer - Bronx at 718, 519, 8336, located at 187 E 163rd St, Bronx, NY 10451, United States, to schedule your consultation today.