When one is facing a divorce in Michigan, there are so many different issues to consider, from custody to alimony, property division to debt division, it can be difficult to focus on specific concerns. While almost all property that is earned by either spouse during a marriage is considered marital property and subject to equal division, there are some unique types of property that I am often asked about and whether the same is subject to an equitable division during a divorce. I am most often asked about pensions or other retirement plans and unvested stock or stock options granted by an employer to an employee spouse during the marriage. This blog addresses those questions in a very basic manner.
Are Retirement Funds and Stock Grants Subject to Division in a Divorce?
The answer is basically yes, they are. There is a particular statute in Michigan enacted by our legislature that states pension plans and retirement funds are specifically considered marital property and will be divided relatively equally between the spouse regardless of which spouse "earned" the funds through her or his employment. This is true whether the same is vested or not at the time of the divorce.
Stock grants and stock are also subject to division regardless of which spouse's employer granted the stocks. However, this is not part of a particular statute and there is an important difference between retirement or pension funds and stock grants. Many stock grants are made as part of a stock grant plan that is provided by employers to employees based upon a variety of conditions. One such condition is that the stock will not vest or the option cannot be exercised until a future date. If the plan specifically states that the employee spouse has to be employed by the company on the date of vesting of the grant or the options, (which I will call the date of maturity for ease in this blog) then those stocks, options, phantom stock or other similar awards are not considered part of the marital estate, the same will be granted solely to the employee spouse and there will be no offset of other marital property.
For instance, if there is a stock grant that allows for some of the stock to vest before the divorce will be finalized, then that stock or those options are considered marital property and will have to be shared with the non-employee spouse upon maturity. If the stocks or options will not vest or otherwise reach maturity until a date that is clearly past the date the divorce will be finalized, then those options remain the sole property of the employee spouse and will not be subject to division. It requires a careful examination of language contained in the stock grant plan from the company and the vesting schedule by an attorney well-versed in family law to know whether it will be considered marital or separate property.
If you have questions about divorce, separation, custody, alimony or property and debt division in Michigan, do not hesitate to contact us to schedule a consultation.