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How are restricted stock units divided in divorce?

Perhaps one of the most difficult parts of divorce proceedings is going through the process of dividing marital assets . Not only does this process require the absolute honesty of each spouse to divulge all assets and debts, it also requires an understanding of how more complex assets work.

Among the more complex assets some business professionals have to contend with are restricted stock units, or RSUs for short. Although it is considered an asset for the purposes of property division, this type of stock option presents a very unique and challenging situation that can change depending on the stock owner’s situation. Let’s take a look.

What is an RSU?

As a 2014 Forbes article explains, an RSU is a type of stock option granted to an employee by an employer as compensation for continued employment. The stocks are given to the employee at no cost on a specific time schedule and for a period of time. They are not transferred to the employee nor are they vested until such conditions have been met.

Once the RSUs have been vested, they are considered income, meaning the employee is responsible for paying income taxes. However, this option does not come without added bonuses, such as the fact that vested RSUs can be sold at anytime, even to pay income taxes, explains an Investopedia article on the subject.

What challenges do they present divorcing business professionals?

Because RSUs are not given to an employee all at once but rather earned over time, dividing this type of stock option relies considerably on how long the employee has been with their employer since being offered the stock options and when divorce proceedings are triggered.

So, just because a business professional is expected to receive a certain amount of RSUs doesn’t mean all will be considered when it comes time to divide marital assets . In addition to this challenge, more often than not, RSUs make it difficult to manage a divorce through alternative divorce methods, especially if one spouse suspects the other is hiding assets, which may require a subpoena to uncover.