Dividing stock options and RSUs in divorce

In tech, finance, healthcare, and executive households, the biggest number in the divorce often isn't in a bank account — it's in an equity portal: stock options and restricted stock units, some vested, most not, all tangled with continued employment. Equity compensation resists every simple instinct about dividing property. It can't usually be transferred to an ex. It's worth something today and possibly far more or less at vesting. And whether it's even marital property depends on why it was granted and when it vests. Getting this wrong routinely costs the out-spouse six figures in high-equity households.

First question: how much of the grant is marital?

A grant that vested during the marriage is generally marital property — that part is easy. The fight is over unvested grants, and courts in most states answer it with a time rule: the marital share reflects how much of the grant's earning period overlapped the marriage. A typical formula divides the time from grant date to separation by the time from grant date to vesting date — so an RSU tranche granted two years before separation that vests one year after is roughly two-thirds marital. Purpose matters too: grants rewarding past performance lean more marital, while grants incentivizing future retention lean more separate, and some states apply different formulas to each. The out-spouse should get the full grant history — grant letters, vesting schedules, plan documents — in discovery, because 'the unvested stuff doesn't count' is the single most expensive myth in equity divorces.

The transfer problem — and the constructive trust answer

Most equity plans flatly prohibit transferring options or unvested RSUs to a former spouse, so the standard solution is a constructive trust arrangement written into the decree: the employee spouse continues to hold the ex's share of the grants, and as each tranche vests (or each option is exercised), they deliver the ex's portion of the net proceeds. The decree must be specific to be safe: which grants and how many units belong to the ex, what happens at vesting, who decides when options are exercised, how taxes are computed and netted, what notice the employee owes, and what happens if the employee quits, is fired, or the company is acquired. A vague 'husband shall share the stock' clause is a future contempt motion; a schedule with grant numbers and worked examples is self-executing.

Negotiation guidance for both sides

• For the out-spouse: demand the complete grant history in discovery, apply the time rule tranche by tranche, and resist trading unvested equity away for trivial consideration — in growth companies it's often the most valuable asset in the marriage.
• For the employee spouse: push for after-tax valuation on every unit, and consider buying out the ex's share with other assets to end the entanglement — sharing vesting events with an ex for years is a recurring source of conflict.
• Both: address the corner cases in the decree — job change (unvested grants usually forfeit), acquisition (grants may accelerate or convert), and death — so no one relitigates when the company surprises everyone.
• Both: a discounted buyout of unvested grants (reflecting forfeiture risk) is often the cleanest deal: the ex takes certain value now, the employee keeps upside and risk.

The bottom line

Equity compensation divides on three questions: how much is marital (the time rule, tranche by tranche), what it's worth (after-tax, always), and how the ex actually gets paid (a constructive trust with specific grants, mechanics, and corner cases in the decree). Unvested grants count, taxes are enormous, and vagueness is the enemy. In households where the equity portal outweighs the bank account, this section of the settlement deserves the most professional attention, not the least — a CDFA or CPA who speaks equity comp earns their fee several times over.