Legal Question in Family Law in California
Stock Options
My wife's lawyer has drawn up a MSA (I have no lawyer) that has a complicated setup (9 pages) on how to handle my stock options. It essentially says the options are held in trust with me and she tells me when she wants to sell them. The options are almost nothing right now. You HAVE to work for the company to own them... they must be sold 90 days of leaving the company. If excersized the taxes are taken out immediately as regular income to myself. I offered to pay her 1/2 their present value... they ignore me.
Question: Does she have a right to the INCREASE in value over the next 10 years the options are alive. The increase of value is due to my working... not hers. She can't hold them even if she got them in a settlement. I told her lawyer that if he wants them, go get them. I don't want to be on her demand nor have our monies mixed in the future. Am I right?
2 Answers from Attorneys
Reply: Stock Options
I can not comment on a marital settlement agreement that I have not seen. There is case law on how to value stock options and how to allocate them between spouses.
I suggest that you consult with an experienced family law lawyer. Experience is not expensive, it's priceless!
You will find some valuable information on various family law issues at my web site.
Good luck to you!
Brian Levy, Esq.
www.calattorney.net
Re: Stock Options
If the options are so-called "golden handcuffs", meaning you have to be working there when they fully mature in order to exercize, there will be a separate property component.
Let's say you were granted the option 1 year before separation but they could not be exercized until 2 years after the separation. Arguably, that would mean that the options (or the stock you would receive) are 1/3 community and 2/3 separate property.
There is also case law that allows for an up-front deduction for tax effect. Hug, Nelson. You want her to pay her share of the taxes which, I believe, will be capital gain, not normal income tax.
You really should not rely on your wife's atty. Have the case reviewed by independent counsel.
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