How are unvested RSUs handled (California, if it matters)?

hanktertelbaum · 2023-01-26T19:00:55+00:00

Unvested means unearned. Unvested shares shouldn't be included as they won't be 'earned' until after divorce.

NothingIsEverEnough · 2023-01-26T19:40:19+00:00

Unvested RSUs are future income. You don’t split it at the time of divorce.

If you get fired today, you’ll never realize that income.

You have to take a snapshot in time.

However, the unvested RSUs are your “earning capability” so that can be used to calculate alimony. Usually they look at three years tax statements.

azwildcat74 · 2023-01-26T20:46:42+00:00

There is unfortunately case law precedent in that RSU’s ARE considered a marital asset.

https://www.charlesullman.com/divorce-lawyer/business-valuation-and-divorce/restricted-stock-option

https://www.kasparlugay.com/blog/dividing-rsu-california-divorce/

Throwaway4120213 · 2023-01-26T19:32:14+00:00

My personal opinion is to make it as uncomplicated as possible, make it so that only you need to take action, and limit any action needed from her.

For my unvested shares- my company will take taxes out and then deposit the net amount of shares in my account. The first option is simple and you are in control. Just put it in the decree that she gets half of the unvested amount after tax at the time of vesting. I didn’t bother with agreeing to a x% tax amount upfront because that would have been another fight - easier to just show her the statement at time of vest. So options vest, company takes taxes, deposits net amount into my account and I transfer over half to ex.

The second option which involves her paying you for the taxes - yeah, anything that involves going back to my ex, having to explain taxes and calculations to someone who doesn’t understand basic math, and having her do anything to uphold the agreement was something I preferred to avoid.

random_topix · 2023-01-26T20:51:30+00:00

Some of the advise you are getting is wrong. It’s all negotiable. I ended up having to split RSUs and ISOs, even un-vested ones because they were granted before the divorce. As they vest she continues to get more. The agreement has me holding them and she has to pay tax when income is realized.

traderjoesbeforehoes · 2023-01-26T22:23:33+00:00

I elect to have my shares sold to cover taxes then i get whatever is left in "clear" shares. She is getting 25% of whatever shares vest after being cleared. But only for the length of time im paying alimony. And only shares that were granted while we were married. I have a separation agreement dated back in 2021, still havent divorced because shes a crazy piece of shit, but thats a story for another day

avabythebeach · 2023-01-27T16:54:44+00:00

I went through a similar situation in CA several years ago and it became pretty complicated. Most of my ex’s compensation was a yearly bonus and half was granted in RSUs that vested once a year over three years. The judge ordered my ex to pay me a percentage on each tranche of RSUs at the time they vested. As far as the tax question, it depends if the ex is going to pay taxes on spousal support. I pay taxes on what I receive from him so he paid me the % of the RSUs received pre-tax. However the law was changed (in 2018 I think). Spousal used to be taxable to the out-spouse, but now spousal support is not taxable to the out-spouse. However, the support amount is significantly lower.

Title	How are unvested RSUs handled (California, if it matters)?
Author	phalo
Upvotes	12
Comments	18
Date	January 26, 2023 6:42 PM UTC (3 years ago)
Subreddit	Posted in /r/Divorce_Men
Original Link	https://old.reddit.com/r/Divorce_Men/comments/10lz29m/how_are_unvested_rsus_handled_california_if_it/
Archive Link	https://theredarchive.com/r/Divorce_Men/how-are-unvested-rsus-handled-california-if-it.1150136 https://theredarchive.com/post/1150136

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