In today’s economy, there is a push on many fronts for better compensation for the average worker. Efforts on behalf of the working poor and labor unions have brought the issue of a higher minimum wage to the attention of the public. In the wake of unfortunate comments by major corporations regarding their policies on employee’s pay, many companies have vowed and reaffirmed their commitment to providing all of their employees with health benefits and livable wages.
In this marketplace, it may become more common for stock options to be awarded to more people. Indeed, companies like Starbucks have been offering all employees, full-time or part-time, options to purchase stock as one of their many benefits.
But how do stock options factor into division of property in the event of divorce? Is it an important matter, important enough to consider when drafting prenuptial agreements or debating marital property? The answer is yes, it is an important matter, and one that can cost quite a bit.
Marital or Nonmarital Property?
Whether the stock options are vital to divorce negotiations or not is contingent on if the options are marital property. In Illinois, and in many jurisdictions, property owned by one spouse before the marriage is non-marital property, whereas any income acquired during the marriage (subject to exceptions) is marital property. As of the divorce decree, non-marital property is given to the spouse who owns it, and marital property is divided as determined by the judge.
Thus, if the stock options were received by one spouse during the marriage, those options are marital property. In Illinois, this is a presumption that can be rebutted by showing that the options were received by some means that would define the options as non marital property. These are listed in the statute.
Further, it does not matter whether the options are vested or not. If the divorce occurs before the options are used, they are still marital property. Courts in Illinois have retained jurisdiction over divorce proceedings in order to determine the distribution of the proceeds of the options once they are exercised, if ever.
Contact an Illinois Divorce Lawyer
Stock options have the potential to be very valuable. In the event of divorce, the division of the proceeds can be rather lucrative, or can mean a steep loss. An experienced divorce attorney can help prevent loss in divorce, or draft a prenup to prevent potential future loss. Contact Sullivan Taylor, Gumina & Palmer, P.C. today.