High Net Worth Clients – Deferred compensation, profit sharing and stock holdings


Many of our high net worth clients have deferred compensation, profit sharing and stock holdings as part of their compensation packages. When a couple divorces, the parties will negotiate an equitable division of property and need to take into account these assets. However, these assets can be difficult to valuate and determining the proper allocation is often confusing. It is important to have a knowledgeable attorney work with you during this process in order to ensure the appropriate equitable division. At Banas Family Law, P.A., we dedicate ourselves to working with our clients and use our skills and experience in handling high net worth divorces to obtain the best possible resolution.

The division of many of these property types will be drafted in a Qualified Domestic Relations Order [QRDO]. The QRDO will set out the terms of the equitable division and must be approved by the benefits plan coordinator.

Deferred compensation is that portion of income to be paid at a future time. It is considered tax-deferred until the employee receives it. Profit sharing is where an employer contributes funds to an employee's account if the company has yielded a profit during a specific span of time. Stock holdings may include those that have vested and those that have not.

In Minnesota, case law has settled that even unvested stock options are considered marital assets. As a very brief overview, depending on whether and when these options have vested, the courts will determine the allocation of the assets. For unvested stock options, the case law in Minnesota has determined that those stock options that will vest after the divorce are similar to vested pension plans and are a marital asset. The marital and nonmarital values of the stock options are valued by the same methods used for valuing unvested pension interests. A percentage formula may be used by the courts, with the number of marital years and the number of total years during which the benefit is earned are calculated.

Because there are so many intricate computations necessary in order to appropriately divide marital assets, it is important to have a skilled, competent attorney at your side. At Banas Family Law, P.A., our St. Paul divorce attorneys are ready to work with you.

Categories: Family Law