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Dividing executive compensation during divorce

On Behalf of | Feb 27, 2023 | Divorce

Divorce can be complex enough when the only financial assets are the family home, cars and bank accounts. Executives and business leaders tend to have properties that are much more complicated.

Dividing these assets during a divorce is an act of balancing the interests of both spouses. It also requires strict, accurate valuation and classification of assets.

Is the asset part of the marital estate?

Some types of executive compensation are clearly things that the couples should split during a divorce. This list might include bonuses or salaries.

Other assets might not be so clear. For example, there is a chance that stock options could be personal property. If the company awarded the options before the marriage as an incentive to join, the judge might decide that they are not subject to division regardless of when the grantee decides to exercise them.

What is the asset worth?

Another important step in dividing assets is to make sure the values are correct. Unlike wage earnings, many types of executive compensation fluctuate in value or have varied levels of liability. For example, there could be a significant difference in the value of a traditional retirement account versus a Roth account, even if both have the same portfolio and dollar amount.

Executives and other high earners also tend to have assets that are difficult to divide. These include art, real estate add collections. Although these typically have sentimental value for one or both spouses, they also typically represent some kind of speculative investment.

When it comes to wealthier couples, divorce is about more than just splitting things down the middle. Detailed negotiation and even litigation could be necessary to ensure both parties get a fair deal.


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