Colorado’s divorce law requires spouses to divide their marital property in a “fair and equitable” way, if not precisely 50/50, while each spouse may retain their separate property.
Stock options often make up a substantial portion of the marital assets in a divorce and may become a source of contention during the process of reaching a settlement agreement that meets the court’s requirement.
A divorce case in Denver, CO often progresses to court if the spouses cannot resolve their dispute. Knowing the viable methods for dividing stock options in a Colorado divorce may help you and your spouse to reach a fair agreement.
First, It Helps to Understand Separate vs. Marital Property In a Colorado Divorce
During the fair and equitable division process required by Colorado divorce law, the state allows divorcing spouses to retain their separate assets and property, or any asset or account that belonged to them before the marriage, assets they inherited during the marriage, or assets they received as gifts during the marriage, as well as any assets acquired after the separation date.
However, sometimes one spouse’s separate asset becomes commingled with their spouse’s. For example, if a spouse enters the marriage with stock accounts and grants the other spouse access to the accounts, they become commingled. In this case, the other spouse may be entitled to half of the assets’ improved value after they were added to the account.
When spouses have a well-executed and enforceable prenuptial agreement separating their property, it’s less likely for commingling to occur.
Performing Valuation Before Dividing Stock Options In a Colorado Divorce
Based on market performance and the economy, stock values may significantly fluctuate over time. During the discovery process of the divorce, it’s necessary to have valuations performed to determine the total value of individual stock options.
Sometimes, each spouse retains a separate valuation professional, and these may arrive at two different conclusions on stock value. In these cases, an attorney may recommend a neutral third-party valuator or may average both conclusions to reach a number that both parties can work with during the asset division and distribution process.
How Are Stock Options Divided In Colorado Divorces?
During the discovery period of the divorce, spouses may save money, time, and contention by having negotiation meetings with their spouses present, or by attending mediation. Professional mediators often offer creative solutions for dividing assets, such as stock options. Common strategies include the following:
- Distribution through direct division of the asset at its vesting time
- Selling the stock and splitting the proceeds from the sale
- One spouse may offer to buy out the other’s share of a stock option
- One spouse may offer another asset of equal value in trade for their share of the stock options during the settlement process
Discussing these options for dividing stock during a Colorado divorce with your proven Denver family attorney and professional mediators helps both spouses to reach a low-conflict settlement agreement rather than going to court, which not only takes longer to litigate and costs more, but it is also a more contentious process.
How Can a Colorado Divorce Lawyer Help My Case?
Dividing stock options can quickly become complex. Call Ciancio Ciancio Brown, P.C. for experienced legal guidance, a firm negotiation process, and access to forensic financial accountants and professional mediators who can help us to resolve your case with an outcome that aligns with your goals.