Working in the tech sector can provide a family with financial stability and a comfortable standard of living. Both Denver and Boulder are part of the Silicon Mountain, and many people work for the tech companies that dominate the economy in these metropolitan areas.
Large companies like Block, Klaviyo and Datadog offer employees complex compensation packages that provide competitive wages and a host of benefits, as well as deferred compensation. While the value of the marital home and other assets acquired with marital income are important considerations during a divorce, the wages and compensation provided by a tech industry employment contract and the vesting schedule it includes can become complicating factors during a divorce. Addressing equity effectively can be a challenge for divorcing tech professionals.
Is employment-related equity marital property?
Tech sector employment contracts may include restricted stock units (RSUs) and stock options, and some of that future income could be part of the marital estate. The Colorado Supreme Court has ruled on this exact issue previously.
The process of determining how to split equity can be relatively complex. Determining how much of the earning period passed during the marriage influences how much equity is divisible. Anything vested at the time of divorce is often marital property. Unvested equity may be divided based on the duration of the marriage and how much time remains before the completion of the vesting schedule.
Valuing stock can also be a challenge. Especially in cases where a company has not yet had its IPO, valuing RSUs and stock options can be especially challenging.
Are restricted stock units income or assets?
Updates to child support laws now allow the courts to consider income as high as $40,000 a month for standard support calculations. Both RSUs and stock bonuses may count as income for the purposes of calculating child support or spousal maintenance.
This approach creates the risk of double-dipping. In cases where RSUs might end up included as marital assets for the purpose of property division but also income for the purposes of support calculations, one spouse may end up unfairly burdened by the final financial decrees.
Professionals in the tech sector likely need guidance from attorneys familiar with the complexities of high-asset divorces. Making an effort to strategize early in the divorce process can minimize the risks of unfair calculations and unnecessary economic concessions. Accordingly. those who are proactive about their financial protection regarding both employment-related business equity and retirement resources may be able to preserve more for rebuilding after their marriage has ended.