family law
Capital Assets and Investments Following Divorce: What You Need To Know
In a Florida divorce, once you identify which assets are marital and which are separate, you may have concerns about how the court will deal with your capital assets and investments. You and your spouse probably made investments intending to get returns, but this situation can have complications when dividing assets during divorce. If your non-marital investments appreciated or generated any income during your marriage, then that growth or income component could become marital property.
For instance, if your employer gave you stock options as a job perk, and during the marriage, these stock options are vested, a court could treat them as marital property. Therefore, dividing stocks in a divorce can be a complicated process. This article will outline your rights and options when it comes to dividing capital assets and investments during a divorce.
Dividing Stock Options After a Divorce
Divorce stock transfer is one of the more complex aspects of property division. In many cases, employees receive stock options as a reward for their work performance. Sometimes an employer may issue you stock options at the outset to hire or retain you, putting a condition that you cannot sell those stocks for a specified period.This stipulation could create difficulties when it comes to dividing stock options after divorce. Similarly, putting a value to the stocks can be difficult because the market conditions may be temporarily volatile, or the stock may belong to a non-public company where the market value is hard to determine.
Stock Valuation Methodologies Are Not Perfect
Divorce stock transfer or division will usually require a valuation of the stock. The Black-Scholes method and the intrinsic value method are two popular methodologies to determine the value of shares. However, the challenge is that both of these methods have limitations. The stock valuation needs to be meticulous and rigorous to ensure you don’t lose out on worth when dividing assets during a divorce.
Date of Investment Asset Valuation Makes a Difference
In a Florida divorce, you are likely to get an accounting statement that evaluates your current investment worth, but this amount may differ from the amount you would receive if you transferred or cashed in those investments. This discrepancy occurs because marital investment assets that are subject to division receive valuation as of the date a spouse files a divorce petition.The value of the asset may considerably increase or decrease between the filing of the divorce and the final divorce decree. Both parties will realize the appropriate gain or loss when the transfer or sale of the investments occurs.