Stock Options, Stock Units, and Restricted Stock Units in a Pennsylvania Divorce
Unless the parties have an agreement (such as a prenuptial agreement) to exclude stock options, stock units, or restricted stock units in a divorce, these types of assets are potentially subject to division in a divorce.
The Pennsylvania court decision in Fisher v. Fisher, compared stock options to that of pension benefits. Like pension benefits, stock options are funded by the employer for a benefit to receive at a later date. Since pension benefits are divided in a divorce, so are stock options.
Whether the option, unit, or restricted unit is subject to division will depend on when the benefit was granted. In the Pennsylvania case MacAleer v. MacAleer, the court held that “regardless of when the right to exercise the options matures, stock options granted during the marriage constitute marital property if the options are granted as compensation for past services.”
If the stock options are granted for future services, the court may determine that the stock options are non-marital. However, if stock options are granted after the date of marriage and prior to the date of separation, “the burden of demonstrating that stock options are separate property belongs to the spouse to whom the options were granted.”
If a stock option, unit, or restricted unit is marital, there are several different ways the asset may be addressed in divorce. A potential issue is that many option and unit plans restrict ownership of the option and unit to the employee. Thus, the parties, attorneys, and the court may have to exercise creativity in addressing the asset in divorce.