Getting a divorce can be a challenging process but ending your marriage with a millionaire comes with its own set of obstacles. There are several assets involved in a millionaire divorce, which means property division is a large part of the legal process. If you’re an Illinois resident and you or your soon-to-be-ex is a wealthy executive, here are some things you should know about executive compensation.
As a reward for hard work, companies will sometimes give their workers the option to purchase company stock in the future. The price of the stock will be based on the price of the stock on the day the stock was granted (this is known as the grant price). While this seems like an attractive incentive, there is a catch. Restricted stock and stock options have vesting periods. This means that an employee is not allowed to access the stocks right away. The vesting period is usually five years. Stock options will likely be part of the property division process in a divorce depending on how long the couple has been married and which spouse was the primary breadwinner.
Restricted stock awards and units
Restricted stock awards are more popular than stock options so you should be aware of how this asset will be awarded to you when it comes to property division. Restricted stock awards and units do have some limitations. As with stock options, employees are not permitted to sell them upon receipt. Employees are required to wait to sell the stock when the shares vest.
Restricted stock awards are often referred to as “golden handcuffs” since employees forfeit their rights to these stocks if they leave the company or are terminated. Once the stock vests, the value of the stock is taxable at regular income tax rates.