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Prenups and stock options: What gets divided in a divorce?

Planning a wedding is exciting, but it’s also smart to consider potential bumps in the road, like divorce. While nobody wants to think about it, a premarital agreement can help protect both partners financially if things don’t work out. 

But what about stock options granted during the marriage? Does a premarital agreement apply to those?

Prenups and stock options

Illinois law recognizes premarital agreements, also called prenuptial agreements. These agreements allow couples to decide how to divide certain assets in case of divorce. This can include things like bank accounts, houses, and even future income.

However, stock options granted during the marriage are generally considered marital property in Illinois. This means that even if a premarital agreement mentions dividing existing stock options, it likely won’t apply to options your spouse gets while you’re married.

For example, perhaps the prenup you signed before you got married says you’ll keep any stock options you each already own but then your spouse’s company grants them new stock options. Since these options were earned during the marriage, they become marital property. The premarital agreement can’t change that.

What can a premarital agreement do about stock options?

While a premarital agreement can’t prevent new stock options from being marital property, it can address how the proceeds from exercising those options will be divided. For example, the agreement could say that if your spouse exercises stock options and makes a profit, you’ll get a certain percentage of that profit.

Get professional help

Prenuptial agreements are complex legal documents. An experienced Illinois attorney can help you understand how they work and how they might apply to your situation.

A prenup can be a valuable tool for couples planning ahead, but it’s important to understand how it applies to assets acquired during the marriage. By talking openly with your partner and doing your research, you can make informed decisions about your financial future together, both now and in the event of divorce.

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