Protecting Your Stock Options, RSUs And Executive Compensation In Divorce

Corporate executives in Bloomfield Hills often face a hidden challenge in divorce: dividing stock options, restricted stock units (RSUs) and deferred compensation. Michigan courts classify these assets as marital property, and without proper legal guidance, you could lose a significant portion of your financial future. At Bono Legal Group, PLLC, our attorney helps high net worth clients in Oakland County navigate the complex valuation and tax consequences of dividing executive compensation in a Michigan divorce.

How Are Unvested RSUs And Stock Options Valued In An Oakland County Divorce?

Many executives assume that unvested equity cannot be touched in a divorce. That’s not true. Michigan law classifies stock options and RSUs as marital property if you earned them during the marriage even if they haven’t vested yet. The Oakland County Family Court will evaluate when the grant was awarded, when it vests and what portion corresponds to your work during the marriage.

For vested stock options, courts typically use the intrinsic value method. This is the difference between the strike price and current market price. For unvested RSUs, courts determine present value based on projected vesting schedules and current share prices, adjusted for risk. This process requires financial expertise and careful documentation of grant agreements and employment timelines.

The Coverture Fraction: Dividing Executive Compensation Equitably

Michigan courts use a formula called the coverture fraction to calculate the marital portion of stock grants in high-asset divorce. This fraction compares the time you worked during the marriage to the total time required for the equity to vest. For example, if you received a four-year RSU grant two years into your marriage and filed for divorce three years later, the marital portion would be three-quarters of the grant.

Once the court determines the marital share, you have two distribution options. The first is an immediate buyout, where one spouse pays the other the present value of their share. The second is a deferred “if, as and when” distribution. This is where the nonemployee spouse receives their portion only when the equity actually vests. Each approach carries different tax consequences and liquidity considerations.

Protecting Deferred Compensation And Perquisites During Your Birmingham Or Bloomfield Hills Divorce

Executive compensation often includes 409A deferred compensation plans, performance-based bonuses and golden parachutes. These instruments require special handling because improper division can trigger immediate tax liability or disqualify the plan’s tax-deferred status. Courts must structure awards carefully to avoid constructive receipt issues that could cost you tens of thousands in unexpected taxes.

You Need An Experienced Attorney Who Protects Executive Compensation Rights

Bono Legal Group, PLLC, works with forensic accountants and tax professionals to ensure accurate valuation and tax-efficient distribution of your executive benefits. Our attorney will deliver formidable representation to protect what you’ve earned. From our office in Bloomfield Hills, we help clients in Birmingham, Rochester Hills and throughout Oakland County, Michigan.

Call our office at 248-266-4627 or send us a message to schedule a consultation. We’ll review your compensation agreements, explain your options and build a strategy that protects your financial interests.