Scared in SF
New
Reged: 04/20/08
Posts: 7
Loc: Calfornia
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My hubby is in the banking business and earns stock options annually. To exercise them, he has to post his own cash and they have to vest for one year before taking them out. In his first marriage- he told her that its too expensive to exercise them and got her to waive rights to them for $30k. He basically got a crap load of cash and recently exercised them (yeah- lied to the X, IMO)
I am teatering on divorce here, and I dont know how the options work. If I am only entitled to profits from the options EARNED during our marriage OR entitled to profits from the options EXERCISED during the marriage (which would be about $400k!!!!!!)
He has over well over a million bucks in options that havent even began to be exercised yet......
Mind you- havent been married that long at all- but since he is a sneaky jerk with finances, I don't want to get screwed. I am already getting my paychecked taxed at the alternative tax minimum and will REALLY get stiffed if I annull vs. divorce.
Most attys dont know about this stuff- and finding someone i can afford is VERY different!!
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I just wanted to love and be loved
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KGrow
Platinum
Reged: 01/27/06
Posts: 3153
Loc: Colorado
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You are entitled to half the options awarded to him while you were married.
Valuing the options is tricky. It's actually even a bit more complicated than you've described. I'm not going to offer a full explanation just offer advice.
Stock options have a "strike price" that should be called out on the paperwork. The shares they're associated with have a current "share price" which you can look up on Yahoo finance etc. A reasonable and simple formula for valuing stock options is: (share price - strike price) x number of shares x 0.65
If the strike price is higher than the share price, the options have no current value. Some would argue that they may well have future value. It would be difficult to get future value recognized in a divorce trial.
The x 0.65 term is to account for tax he'll have to pay. This can be in the range 0.65 to 0.75 depending on details of how the transaction is done.
What you want to do is get cash or other liquid assets in exchange for the value of these options. You don't want the options themselves and you don't want to wait until he actually exercises them to be reimbursed.
He'll try to argue that the options are not worth real money because a) they're not liquid and/or b) share price can change between now and when he's allowed to or chooses to exercise them. You need to ask you lawyer to dig out the case law to refute these arguments.
Edited by KGrow (04/23/08 11:17 AM)
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Samsung
Platinum
Reged: 06/14/07
Posts: 2122
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Wow...what a frustrating post to read. You have been married for 9 months and plan to divorce....and you don't want to get screwed? How could any poster possibly read this, and feel that is exactly what you plan to do you your husband? You have nothing vested in his options; they are all pre-marriage. How can you possibly be screwed on somthing you have contributed $0 to?
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jbar
Platinum
Reged: 12/16/06
Posts: 1010
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You have been married for 9 months and plan to divorce....and you don't want to get screwed? How could any poster possibly read this, and feel that is exactly what you plan to do you your husband?
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Samsung, of course you are right.
Under ridiculous "community property" law, however, the very fact that the exact dollar amount of the value of the options representing marital property cannot accurately be determined (even if it did, in fact, happen to be zero) is the very thing that could result in the total value of the options being ruled community property!
See my active thread, "There is a law...", in the Men's Rights forum here!
Edited by jbar (04/25/08 12:50 AM)
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Scared in SF
New
Reged: 04/20/08
Posts: 7
Loc: Calfornia
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I can understand your frustration- especially not knowing all of the details. I have a career and have invested so much into our current home (everything here is mine, down to the dishes- all premarital property technically) and if we went out seperate ways, I dont think he'd be so fair about it.
He always has told me "what yours is mine and whats mine is mine".
I understand how men are generally treated unfair in divorce, when they are the "bread winner"- but the flip side is a women who had assets that I used to front his financial endeavors because I was told it was for "us". Then, be left wondering if I can get back what was mine. My concern is- because these options were earned before me- if they are untouchable despite any cash I gave. And, because I give- that means gift and I dont see it back?
While you may judge me and say I'm a gold digger and planned on marrying him to get his $$$- I could say the same about him.
Why cant a man be at fault? I just feel the sterotype of that its "always" the woman is unfair.
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I just wanted to love and be loved
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jbar
Platinum
Reged: 12/16/06
Posts: 1010
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If the options can be proven to have been granted to him before the marriage then I don't see how they could be community property. If they are somehow encashed during the marriage, then the resulting funds may be community property, depending on your state law. I don't see how a court could order them to be sold, however, anymore than it could order a home which is seperate property to be sold in a divorce. Options granted him during the marriage are community property and a court may have some way to divide them, encashed or not. I know that IRS, forever looking for more money, has tried to come up with an imputed value of stock options in order to find a way to tax them, but even they admit that this is unrealized or phantom income.
On the other hand, if the encashment value of the options granted before the marriage can be demonstrated to have risen during the marriage, then it might be argued that this increase, only, is community property. Normally for the increased value of seperate property to be community property the party wishing to receive such community property must show that they were instrumental in effecting the increase by improving the asset or maintaining it. Even if you could assert that you somehow assisted your husband in causing the value of the options to increase, the amount of such increase attributable to his effort would then have to be calculated as a fraction of the increase based upon the total number of employees whose efforts can be seen as having contributed to it.
On the third hand, as I suggested in my last post, if any options--or perhaps even the encashment value of them--cannot clearly be defined as seperate property then the option or its encashment value may be ruled all community property ("comingled" assets). Whether this rule would apply to the entire option or only the increase in its value (from the time you got married) will depend on the court. Good luck.
Unless you can prove that any items in the house are your seperate property, they are community property. Why don't you hang on until you can qualify for alimony?
Edited by jbar (04/25/08 04:45 PM)
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Jada
Platinum
Reged: 06/02/07
Posts: 3331
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Scared in SF,
Read Jbar's history of posts. You will get an idea of who you are dealing with.
He keeps his wife poor thinking that she can't file for divorce without money. He is also trying to manipulate her into going pro se with him saying what is in the papers. Basically, he's trying to keep all of their marital assets for himself.
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