Knowledgeable Counsel For Startup Founders In Silicon Valley And Across California
Entrepreneurs looking to get their startup off the ground know that during the initial phases of their business, money is going to be tight. They know they may not be able to pay their early employees the salaries they’re expecting — let alone their own salaries — and will instead need to find alternative forms of employee compensation, oftentimes in the form of stock options such as restricted stock units (RSUs).
RSUs aren’t just a great choice for startup founders to use as compensation for their employees’ time and skills, however. RSUs can also become valuable assets for founders who often go the longest period of time without receiving pay after creating a startup. Unfortunately, valuable assets like RSUs can create major conflicts for founders when they find themselves in the throes of divorce.
At Kaspar & Lugay LLP in Tiburon, California, we help startup founders and business owners alike handle the challenge of valuating and dividing community property, including RSUs, in divorce settlements. Attorney and certified public accountant Brent Kaspar is uniquely equipped to handle these types of cases because he has the knowledge and experience necessary to assemble financial data concerning RSUs and other assets in order to help clients reach a more amicable and favorable divorce settlement.
RSUs And The Unique Problem They Present Startup Founders
The world is filled with entrepreneurs who carry the dream of one day turning their brilliant startup idea into a successful business. That’s why RSUs are so tempting — they hold the potential for being worth a tremendous sum of money later on. This is why, in addition to the fact that they came up with the concept for the company, founders typically receive a larger percentage of equity compensation in the form of RSUs.
With any stock option, however, there is always risk, and RSUs are no different. For founders who are going through divorce, this creates two possible scenarios that are equally challenging and require guidance from a seasoned family law attorney:
The startup is successful — While this might seem like the best-case scenario, it can actually create tremendous problems for founders. RSUs can constitute community property in California. If this ends up being the case, the very valuable RSUs will need to be divided according to California’s community property rules, leaving the founder with only a fraction of the wealth they had.
The startup is unsuccessful — In addition to being a worst-case scenario, failed startups or startups that are not performing as hoped present founders with a challenging situation: How to value the RSUs they hold. In a case such as this, RSUs could be worth very little or nothing at all. Additionally, depending on the vestment schedule, a founder may not even have access to all RSUs in their grant, which raises another question: How do you forecast the value of this unowned and unvested stock?
Seeking Trusted Counsel Through The Valuation Process
Valuation is a complex process no one should handle on their own, especially if you have considerable assets, business holdings or other complex assets. For startup founders with RSU options, the very nature of this asset combined with its potential future worth makes it a particularly contested asset in divorce proceedings.
At Kaspar & Lugay LLP, we know what’s at stake for startup founders with RSUs, which is why we take an extensive inventory of our clients’ assets to determine:
If stock options exist and if so, how much
The distribution schedule for the RSU, including what conditions have been met and how far down the road additional conditions will be met
The vestment schedule for the RSU, including how this will affect the founder’s wealth and how this will affect the division of community property
How RSUs will affect our clients’ tax burden and make suggestions for dividing assets in a way that least impacts our clients
If any RSUs should be considered separate property rather than community property
We Represent Founders And Spouses Of Founders
Our lawyers recognize the fact that spouses of startup founders may need just as much help dividing RSUs and other stocks options, which is why we represent high-asset individuals on either side of the issue.
When working with spouses of startup founders, we are aware of the fact that a founder may conceal the existence of RSUs. In these types of cases, we use our experience and knowledge to uncover hidden assets and stock options to ensure our clients are getting a fair divorce settlement.
Work With A Trusted Marin County Family Law Attorney
Seeing a startup succeed is a desire all founders have. What they don’t want to see is their hard work unfairly divided in a divorce settlement. Our skilled high-asset attorneys help founders protect their wealth and best interests by taking proper inventory of assets and using our tenacity to resolve property division disputes quickly and amicably.
If you would like to speak with Brent Kaspar or any of our other experienced family law attorneys, contact our law office in Tiburon to schedule a consultation. Call 415-889-8734 or contact us online to get started.