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Property division is one aspect of a divorce that is present in almost every case.  It covers everything from clothes and sports equipment, to the marital home, bank accounts and stocks.  An interesting subset of property division revolves around stock options, particularly incentive or retention stock options that are granted to one spouse as a benefit of their employment.  This blog is written to very generally address how the family courts in Michigan will handle the division of stock options that are part of a long-term incentive or retention plan.  If you have specific questions regarding divorce or separation in Michigan, please do not hesitate to contact us by clicking on this link or calling (248) 608-4123.

What Happens To My Employer Provided Incentive or Retention Stock Options In A Divorce In Michigan?

The first thing divorce attorneys do when analyzing the division of property is to determine whether the property is marital or separate property.  Marital property is most property, including income, gains, lottery winnings, etc. that come into the hands of either spouse while they are married.  If the property is marital it is almost certainly subject to equitable or roughly equal division.  If the property cannot be divided it will be offset by property of other similar value.  Separate property falls into one of a few categories such as inheritances that are kept separate or premarital property (property owned by one spouse before the marriage) that is kept separate.  Separate property is generally awarded to the owner spouse without division or offset of other property.   It should be noted that If marital funds are combined with or used to maintain the separate property, it will be considered commingled and become marital property..

Stock options that are granted as part of an employer retention or incentive plan fall into a special category all their own.  Case law has developed that indicates if a stock option incentive or retention plan requires the person to be employed by that employer when the stocks vest, and the vesting date will occur on a date after the parties will be divorced, it is not considered property for the purpose of the divorce and it will granted to the employee or participant spouse to whom it was granted without division or offset.  The courts in Michigan have decided that because there is a condition subsequent to the end of the marriage (continued employment with the same employer), then it is not to be included in the marital estate.

Divorce and family law can be very complicated and counterintuitive.  If a divorce or separation is imminent in your life, please contact us to schedule a consultation by clicking on this link or calling (248) 608-4123.