Stock options are a form of compensation issued to employees that allows the employee to buy stock in the company at a set price regardless of the value of the stock. Normally, the option price is lower than the actual value of the stock allowing the employee to receive an economic benefit from the exercise of the option. For instance, if the employee is granted an option to purchase 100 shares of stock at a price of $1 per share and the stock is valued at $100 per share, the employee could exercise the option to purchase by paying $100 and would receive stock worth $10,000.
Stock options usually vest over a period of employment maintained by the employee. It is important to understand the date of grant and the vesting schedule in order to determine whether the community has an interest in the stock options. If the options were granted during the marriage and fully vested prior to the date of separation, then 100% of the options are community property. If the options were granted during the marriage, but only a portion vested during the marriage, the community has a proportional interest in the options. Often, a Nelson formula is applied to determine the community interest in the options. It is important to work with an attorney who understands the division of stock options as part of the resolution of your divorce.
It is critical to understand your financial picture when you are going through a divorce. Often, your spouse holds important information about your finances that you do not have access to. There are several mechanisms through which you can obtain your spouse’s financial information, all of which fall under the general process called “discovery.”
Financial disclosure is mandated by law
In family law cases, full, financial disclosure is mandated by law. That means that both parties to the divorce action are required to exchange complete financial disclosures prior to finalizing their divorce. However, often, the mandatory financial disclosures are lacking in critical information about the value of a business, the true income of the other party or the value of certain assets.
Your options if the disclosure doesn’t have enough of your spouse’s financial information
In the event that the information contained in the mandatory disclosures is insufficient to enable you to determine the value of assets and liabilities or to determine what the other spouse’s compensation is for purposes of calculation of support, you can issue formal discovery requests in the form of a Request for Production of Documents, Interrogatories (Special or Form), Requests for Admissions, Subpoenas, and Notices of Depositions.
Each discovery tool requires the responding party to provide the information requested in the discovery. For instance, if one party issues a Request for Production of Documents, the responding party is required to respond to the request and provide all documents responsive to the request within 30 days. Likewise, Interrogatories and Requests for Admission require the responding party to respond, in writing and under penalty of perjury, to the questions asked in the Interrogatories or Requests for Admissions.
Depositions require the person being deposed to appear and answer questions under penalty of perjury and subpoenas require third parties (i.e. employers and financial institutions) to provide documents related to the other party.
Which discovery tools are right for you?
To learn which discovery tools would be right in your case, call Rachel Castrejon.