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Stock options and restricted stock present challenges in divorce

Many Connecticut couples know that dividing property in a divorce can be a challenging process. Even if the assets only consist of a house, some savings and retirement accounts, the property division process can be complex. Marital property division becomes even more complicated when assets like restricted stock or stock options are involved. Stock options represent the opportunity to buy company stock at a fixed price regardless of the current market price. Restricted stock are shares of a company that have been granted as compensation but cannot be sold until certain conditions are met.

Experts say a spouse should take several steps to make sure they are fairly compensated for their spouse's options or restricted stock. The first is to make sure they're aware that the stock exists. These types of assets aren't usually reported on tax returns or W2s. There also may not be any regular statements associated with the assets. That means one spouse could have these types of assets and keep them hidden from the other spouse.

Once the assets are disclosed, it's important to try and place a value on them, which in some cases can be difficult. A stock option may not have much value if it is currently trading for less than the exercise price, and the value of shares of a private company may be difficult to ascertain, making it hard to determine the worth of restricted stock.

It may be advisable for an individual in this situation to use an attorney who has experience in divorce law matters. The attorney may choose to bring in a financial analyst to assist in determining the assets' approximate value.

Source: Forbes, "Dividing Stock Options And Restricted Stock In Divorce", Jeff Landers, March 19, 2014

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