--- title: "Decoding Divorce: Stock Options & Restricted Stock - Mahlen Financial" description: In this post, we decode what these stock types mean and some common pitfalls to watch out for as you evaluate how to handle them in your divorce. image: https://amf-divorce.com/hubfs/Imported_Blog_Media/qtq80-sYGkB0.jpeg --- ## A.M. Financial - [Services](https://amf-divorce.com/divorce-transition-services) - [Service Plan](https://amf-divorce.com/service-plan) - [Frequently Asked Questions](https://amf-divorce.com/frequently-asked-questions) - [Our Blog](https://amf-divorce.com/our-blog) - [About Amy](https://amf-divorce.com/about-amy) - [Contact Us](https://amf-divorce.com/contact-us) - [Services](https://amf-divorce.com/divorce-transition-services) - [Services](https://amf-divorce.com/divorce-transition-services) - [Service Plan](https://amf-divorce.com/service-plan) - [Frequently Asked Questions](https://amf-divorce.com/frequently-asked-questions) - [Our Blog](https://amf-divorce.com/our-blog) - [About Amy](https://amf-divorce.com/about-amy) - [Contact Us](https://amf-divorce.com/contact-us) [Book a Meeting](https://calendly.com/amymahlenmelander/consultdivorcefinancialplanning) # Decoding Divorce: Stock Options & Restricted Stock March 09, 2023 5 minutes to read As part of evaluating your total marital estate, various types of stock might come into play. Two of the most confusing of those stocks include stock options and restricted stock, which need special evaluation in your divorce and asset division. In this post, we decode what these stock types mean and some common pitfalls to watch out for as you evaluate how to handle them in your divorce. ## What are Stock Options? Stock options are rights and agreements that allow an employee to buy a company stock at a predetermined price in the future. Stock options are often part of a total compensation package to employees of publicly traded companies. Stock options are considered “exercised” when you purchase shares of a stock at the set price defined in your option agreement or grant. Often you will “exercise” or buy stock when your “exercise price” is lower than market price – this provides an immediate gain.  However, if the exercise price is higher than the market price the options are considered to be “under water” and essentially worthless because the shares could be purchased on the open market without a benefit of the stock options.  Valuing stock options can be challenging because the future stock price is unknown and can fluctuate up or down. ## What is Restricted Stock? On the other hand, restricted stock is a form of equity compensation. Often called restricted stock units or RSUs, shares are granted to an employee but subject to a vesting schedule and other possible stipulations before the employee becomes an actual owner of the stock shares. Employees of publicly-traded or private companies may be awarded RSUs that vest at certain employment milestones (one year, three years, five years, etc) and any unvested funds are lost completely upon termination of employment. ![](https://amf-divorce.com/hs-fs/hubfs/Imported_Blog_Media/qtq80-xLNCRq-300x228.jpeg?width=300&name=qtq80-xLNCRq-300x228.jpeg) ![](https://amf-divorce.com/hs-fs/hubfs/Imported_Blog_Media/qtq80-xLNCRq-300x228.jpeg?width=300&name=qtq80-xLNCRq-300x228.jpeg) ## Avoiding Pitfalls There are a number of financial pitfalls to avoid while managing how to evaluate stock options and RSU’s throughout your divorce.  1. **Don’t Skip Discovery –**If you haven’t been closely involved in your finances during your marriage, or aren’t sure if your spouse has stock options or RSUs, you may have to request a formal discovery of documents to learn if they exist. Often, stock options and RSUs aren’t on tax forms, W2s, or other documents until exercised or vested, so you can’t obtain information on these financial benefits through normal financial reviews. If you and your attorney request a discovery, you may be able to get access to this type of information through requests for information to HR or have an attorney send a letter to subpoena records detailing all benefits provided by your spouse’s employer. 1. **Don’t Ignore Because Complex-** Avoid the pitfall of ignoring these assets because they are complex, confusing, or require additional discovery steps. This can be compounded by not defining a clear value for these stocks, especially if they are not yet fully vested or private stock. In these cases, stock options and RSUs might not be subject to division and it is best to discuss this with your [attorney](https://mahlenfinancial.com/finding-the-right-divorce-attorney-6-questions-to-ask/) and financial planner. 1. **Don’t Forget About Tax Consequences-** Lastly, don’t overlook the tax consequences of division, which can be complex with these types of investments. As mentioned above, when stock options or RSUs are vested or sold, they are usually taxed to the spouse who is employed by the company that awards them. Therefore, any proceeds provided to an ex-spouse in an asset division should be after-tax proceeds, and it is essential to determine what percentage after-tax proceeds will be.  Stock Options: The tax consequences are different for ‘qualified stock options’ versus ‘non-qualified’. Non-qualified options can trigger taxes at higher ordinary income rates when the options are exercised and are subject to capital gains tax rates when sold.  Qualified stock options can qualify for lower capital gains tax rates if the options have been held for 2 years after the grant date or one year after the options have been exercised, whichever is later. Restricted Stock Units (RSUs): RSUs are taxed as ordinary income at the time of vesting. 1. **Don’t Overlook Ownership Issues-** There can also be ownership issues with these types of investments. For instance, usually ownership can not be transferred to the non-employee spouse post-divorce. This means one spouse would need to rely on the employed spouse for future information, to carry out liquidation instructions when provided, among other items that are required.  This can be difficult to do if the relationship is strained. There is much more to uncover relative to stock options and RSUs and working with a financial professional alongside an attorney can ensure that you get a fair portion of these important assets without significant tax consequences. The discovery and subpoena process can take extra time, so it is best to start the process early to ensure you have the time you need to negotiate the best division of these assets based on your financial goals. [Contact A.M Financial](https://mahlenfinancial.com/contact-us/) to schedule a consultation where we can learn more about the circumstances surrounding your divorce and support your needs on this topic and more.  - - - - - [mailto:?subject='https://amf-divorce.com/our-blog/decoding-divorce-stock-options-restricted-stock'](mailto:?subject='https://amf-divorce.com/our-blog/decoding-divorce-stock-options-restricted-stock') [Divorce](https://amf-divorce.com/our-blog/tag/divorce), [Finances](https://amf-divorce.com/our-blog/tag/finances), [Stock](https://amf-divorce.com/our-blog/tag/stock), [Retirement](https://amf-divorce.com/our-blog/tag/retirement), [Retirement Planning](https://amf-divorce.com/our-blog/tag/retirement-planning) ### Related Posts ## [Understanding Pension Plans in Your Divorce](https://amf-divorce.com/our-blog/understanding-pension-plans-in-your-divorce) If there wasn’t enough to sort through, employer pension plans can be a particularly confusing... [CONTINUE READING](https://amf-divorce.com/our-blog/understanding-pension-plans-in-your-divorce) ## [Stay at Home Moms: Learning to Budget Post-Divorce](https://amf-divorce.com/our-blog/stay-at-home-moms-learning-to-budget-post-divorce) In my work supporting divorced individuals in the Colorado area along their financial journey, I... [CONTINUE READING](https://amf-divorce.com/our-blog/stay-at-home-moms-learning-to-budget-post-divorce) ## [Saving for Retirement after Divorce](https://amf-divorce.com/our-blog/retirement-after-divorce) In working with clients throughout Colorado, many divorced women do not save much for retirement.... [CONTINUE READING](https://amf-divorce.com/our-blog/retirement-after-divorce) ### Posts by Tag - [Divorce (59)](https://amf-divorce.com/our-blog/tag/divorce) - [Finances (39)](https://amf-divorce.com/our-blog/tag/finances) - [Divorce Budgeting (33)](https://amf-divorce.com/our-blog/tag/divorce-budgeting) - [Planning (33)](https://amf-divorce.com/our-blog/tag/planning) - [Financial Planning (28)](https://amf-divorce.com/our-blog/tag/financial-planning) - [Budgeting (23)](https://amf-divorce.com/our-blog/tag/budgeting) - [Taxes (20)](https://amf-divorce.com/our-blog/tag/taxes) - [Assets (10)](https://amf-divorce.com/our-blog/tag/assets) - [Retirement Accounts (10)](https://amf-divorce.com/our-blog/tag/retirement-accounts) - [Divorce Options and Methods (9)](https://amf-divorce.com/our-blog/tag/divorce-options-and-methods) - [Maintenance (9)](https://amf-divorce.com/our-blog/tag/maintenance) - [Child Support (8)](https://amf-divorce.com/our-blog/tag/child-support) - [Investments (8)](https://amf-divorce.com/our-blog/tag/investments) - [Retirement (8)](https://amf-divorce.com/our-blog/tag/retirement) - [Property (7)](https://amf-divorce.com/our-blog/tag/property) - [Real Estate (7)](https://amf-divorce.com/our-blog/tag/real-estate) - [Spousal Support (7)](https://amf-divorce.com/our-blog/tag/spousal-support) - [Emotions (6)](https://amf-divorce.com/our-blog/tag/emotions) - [Family (6)](https://amf-divorce.com/our-blog/tag/family) - [Mediation (5)](https://amf-divorce.com/our-blog/tag/mediation) - [Property Division (5)](https://amf-divorce.com/our-blog/tag/property-division) - [Separation (4)](https://amf-divorce.com/our-blog/tag/separation) - [Co-Parenting (3)](https://amf-divorce.com/our-blog/tag/co-parenting) - [Coaching (3)](https://amf-divorce.com/our-blog/tag/coaching) - [Court (3)](https://amf-divorce.com/our-blog/tag/court) - [Estate Planning (3)](https://amf-divorce.com/our-blog/tag/estate-planning) - [Kids (3)](https://amf-divorce.com/our-blog/tag/kids) - [Retirement Planning (3)](https://amf-divorce.com/our-blog/tag/retirement-planning) - [Tips (3)](https://amf-divorce.com/our-blog/tag/tips) - [Counseling (2)](https://amf-divorce.com/our-blog/tag/counseling) - [Home (2)](https://amf-divorce.com/our-blog/tag/home) - [Interest Rates (2)](https://amf-divorce.com/our-blog/tag/interest-rates) - [Lawyer (2)](https://amf-divorce.com/our-blog/tag/lawyer) - [Mediator (2)](https://amf-divorce.com/our-blog/tag/mediator) - [CFI (1)](https://amf-divorce.com/our-blog/tag/cfi) - [College (1)](https://amf-divorce.com/our-blog/tag/college) - [Do It Yourself (1)](https://amf-divorce.com/our-blog/tag/do-it-yourself) - [Gifts (1)](https://amf-divorce.com/our-blog/tag/gifts) - [Healthcare (1)](https://amf-divorce.com/our-blog/tag/healthcare) - [Inflation (1)](https://amf-divorce.com/our-blog/tag/inflation) - [Insurance (1)](https://amf-divorce.com/our-blog/tag/insurance) - [Litigation (1)](https://amf-divorce.com/our-blog/tag/litigation) - [PRE (1)](https://amf-divorce.com/our-blog/tag/pre) - [Remarriage (1)](https://amf-divorce.com/our-blog/tag/remarriage) - [Stock (1)](https://amf-divorce.com/our-blog/tag/stock) - [Stock Market (1)](https://amf-divorce.com/our-blog/tag/stock-market) - [Transfers (1)](https://amf-divorce.com/our-blog/tag/transfers) - [Travel (1)](https://amf-divorce.com/our-blog/tag/travel) See all ##### About Amy With compassion and patience, Amy focuses on her client’s unique priorities to build a financial road map that provides clarity to make informed decisions today regarding the future. ##### Links - [Home](https://amf-divorce.com) - [Services](https://amf-divorce.com/divorce-transition-services) - [Our Blog](https://amf-divorce.com/our-blog) - [About Amy](https://amf-divorce.com/about-amy) - [Contact Us](https://amf-divorce.com/contact-us) - [Schedule a Meeting](https://calendly.com/amymahlenmelander) ©2026 Copyright. All rights reserved. A.M. Financial provides supporting financial information, evaluation and analysis to be utilized by the client and the client’s selected attorney if directed, during the process of their divorce. ervices provided in regards to this agreement are solely fee-only and do not involve investment or security advice or insurance transactions. All information is financial in nature and should not be construed or relied upon as legal or tax advice. A.M. Financial IS NOT AN ATTORNEY AND DOES NOT PROVIDE LEGAL OR TAX ADVICE. Individuals are encouraged to seek competent legal and tax advice from professionals who specialize in divorce and tax laws in their respective state. Amy Melander (CRD #4692263) is an Investment Adviser Representative of OneDigital Investment Advisors, LLC (ODIA). ODIA and A.M. Financial are independent and unaffiliated entities. ODIA does not offer or provide divorce financial planning services and any statements and/or opinions expressed by A.M. Financial do not represent the views and/or opinions of ODIA.   This website is a publication of A.M. Financial. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Content should not be viewed as personalized investment advice or as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. A professional adviser should be consulted before implementing any of the strategies presented. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Amy Mahlen", "url" : "https://amf-divorce.com/our-blog/author/amy-mahlen" }, "dateModified" : "2023-06-01T12:45:08.576Z", "datePublished" : "2023-03-09T05:00:00.000Z", "headline" : "Decoding Divorce: Stock Options & Restricted Stock - Mahlen Financial", "image" : [ "https://amf-divorce.com/hubfs/Imported_Blog_Media/qtq80-sYGkB0.jpeg" ], "mainEntityOfPage" : { "@id" : "https://amf-divorce.com/our-blog/decoding-divorce-stock-options-restricted-stock", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://amf-divorce.com/hubfs/amf-divorce-logo.jpg" } } } ``` ```json { "@context" : "http://schema.org", "@type" : "BlogPosting", "articleBody" : "As part of evaluating your total marital estate, various types of stock might come into play. Two of the most confusing of those stocks include stock options and restricted stock, which need special evaluation in your divorce and asset division. In this post, we decode what these stock types mean and some common pitfalls to watch out for as you evaluate how to handle them in your divorce. What are Stock Options? Stock options are rights and agreements that allow an employee to buy a company stock at a predetermined price in the future. Stock options are often part of a total compensation package to employees of publicly traded companies. Stock options are considered “exercised” when you purchase shares of a stock at the set price defined in your option agreement or grant. Often you will “exercise” or buy stock when your “exercise price” is lower than market price – this provides an immediate gain. However, if the exercise price is higher than the market price the options are considered to be “under water” and essentially worthless because the shares could be purchased on the open market without a benefit of the stock options. Valuing stock options can be challenging because the future stock price is unknown and can fluctuate up or down. What is Restricted Stock? On the other hand, restricted stock is a form of equity compensation. Often called restricted stock units or RSUs, shares are granted to an employee but subject to a vesting schedule and other possible stipulations before the employee becomes an actual owner of the stock shares. Employees of publicly-traded or private companies may be awarded RSUs that vest at certain employment milestones (one year, three years, five years, etc) and any unvested funds are lost completely upon termination of employment. Avoiding Pitfalls There are a number of financial pitfalls to avoid while managing how to evaluate stock options and RSU’s throughout your divorce. Don’t Skip Discovery –If you haven’t been closely involved in your finances during your marriage, or aren’t sure if your spouse has stock options or RSUs, you may have to request a formal discovery of documents to learn if they exist. Often, stock options and RSUs aren’t on tax forms, W2s, or other documents until exercised or vested, so you can’t obtain information on these financial benefits through normal financial reviews. If you and your attorney request a discovery, you may be able to get access to this type of information through requests for information to HR or have an attorney send a letter to subpoena records detailing all benefits provided by your spouse’s employer. Don’t Ignore Because Complex- Avoid the pitfall of ignoring these assets because they are complex, confusing, or require additional discovery steps. This can be compounded by not defining a clear value for these stocks, especially if they are not yet fully vested or private stock. In these cases, stock options and RSUs might not be subject to division and it is best to discuss this with your attorney and financial planner. Don’t Forget About Tax Consequences- Lastly, don’t overlook the tax consequences of division, which can be complex with these types of investments. As mentioned above, when stock options or RSUs are vested or sold, they are usually taxed to the spouse who is employed by the company that awards them. Therefore, any proceeds provided to an ex-spouse in an asset division should be after-tax proceeds, and it is essential to determine what percentage after-tax proceeds will be. Stock Options: The tax consequences are different for ‘qualified stock options’ versus ‘non-qualified’. Non-qualified options can trigger taxes at higher ordinary income rates when the options are exercised and are subject to capital gains tax rates when sold. Qualified stock options can qualify for lower capital gains tax rates if the options have been held for 2 years after the grant date or one year after the options have been exercised, whichever is later. Restricted Stock Units (RSUs): RSUs are taxed as ordinary income at the time of vesting. Don’t Overlook Ownership Issues- There can also be ownership issues with these types of investments. For instance, usually ownership can not be transferred to the non-employee spouse post-divorce. This means one spouse would need to rely on the employed spouse for future information, to carry out liquidation instructions when provided, among other items that are required. This can be difficult to do if the relationship is strained. There is much more to uncover relative to stock options and RSUs and working with a financial professional alongside an attorney can ensure that you get a fair portion of these important assets without significant tax consequences. The discovery and subpoena process can take extra time, so it is best to start the process early to ensure you have the time you need to negotiate the best division of these assets based on your financial goals. Contact A.M Financial to schedule a consultation where we can learn more about the circumstances surrounding your divorce and support your needs on this topic and more.", "author" : { "@type" : "Person", "name" : "Amy Mahlen", "sameAs" : "", "url" : "https://amf-divorce.com/our-blog/author/amy-mahlen" }, "dateModified" : "09/03/2023", "datePublished" : "09/03/2023", "headline" : "Decoding Divorce: Stock Options & Restricted Stock", "image" : { "@type" : "ImageObject", "height" : 400, "url" : "https://cdn2.hubspot.net/hubfs/39875594/Imported_Blog_Media/qtq80-sYGkB0.jpeg", "width" : 750 }, "mainEntityOfPage" : "https://amf-divorce.com/our-blog/decoding-divorce-stock-options-restricted-stock", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "" }, "name" : "A.M. Financial", "url" : "amf-divorce.com" } } ```