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Cases of Interest: Stock Options
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ARIZONA: In re Marriage of Robinson, No. D 118361 (Ariz. Ct. App. Nov. 27, 2001).
An employee's vested and matured stock options are "income" for purposes of child support. The opinion gives an excellent review of the case law on the subject and discusses methods of valuing the options.
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COLORADO: In re Marriage of Huston, 967 P.2d 181 (Colo. Ct. App. 1998).
Nonvested stock options are not property subject to equitable distribution; any marital component of vested stock options may be distributed through reserved jurisdiction or other appropriate methods.
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COLORADO: In re Marriage of Miller, 915 P.2d 1314 (Colo. 1996).
To the extent that an employee stock option is granted in consideration of past services during marriage, the option constitutes marital property when granted.
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COLORADO: In re Marriage of Miller, 888 P.2d 317 (Colo. Ct. App. 1995).
Stock options that the husband received during marriage but could not exercise until after the dissolution were not wholly marital; the wife was entitled to one-half of the marital portion of the net profits from the options when the husband exercised them.
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COLORADO: In re Marriage of Renier, 854 P.2d 1382 (Colo. Ct. App. 1993).
Stock shares purchased during marriage with marital funds through options acquired before marriage were marital property. Additional shares husband acquired during marriage were also marital, since he failed to trace those shares to stock split of shares acquired before marriage.
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ILLINOIS: In re Marriage of Isaacs, ___ Ill. App. 3d ___, 632 N.E.2d 228 (1994).
A stock option granted to the wife was marital property because it was meant to compensate her for the diminution of the value of stock that was marital property.
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INDIANA: Knotts v. Knotts, 693 N.E.2d 962 (Ind. Ct. App. 1998).
The value of the husband's unexercised stock options should not have been reduced by the amount of estimated capital gains taxes.
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INDIANA: Hiser v. Hiser, 692 N.E.2d 925 (Ind. Ct. App. 1998).
The value of the husband's stock options was properly reduced to account for taxes paid at the time when he exercised them and sold the stock during the dissolution proceedings.
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INDIANA: Henry v. Henry, No. 02A03-0106-CV-203 (Ind. Ct. App. Nov. 2001).
The wife appealed the division of property, arguing that the court was obligated to consider the value of the husband's interest in certain stock options through his employer that he had not exercised but could have, as of the final hearing date on the petition for dissolution.
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MASSACHUSETTS: Baccanti v. Morton, No. SJC-08442 (Mass. Aug. 13, 2001).
The husband argued on appeal that the judge erred in awarding the wife one-half of his issued but unvested employee stock options. He claims that the options should not have been considered marital property subject to division because they would not vest until after dissolution of the marriage.
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NEBRASKA: Davidson v. Davidson, 254 Neb. 656, 578 N.W.2d 848 (1998).
Unvested stock options and stock retention shares constitute marital property when accumulated and acquired during the marriage through the parties' joint efforts, and the "time rule" should be applied to identify the marital portion.
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NEW JERSEY: Pascale v. Pascale, ___ N.J. Super. ___, 644 A.2d 638 (App. Div. 1994).
One stock option owned by the wife should be excluded from equitable distribution because it was intended as an incentive for her future performance, but another stock option was subject to distribution because it was intended to recognize the wife's past employment performance.
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NEW YORK: DeJesus v. DeJesus, 90 N.Y.2d 643, 665 N.Y.S.2d 36 (1997).
When classifying stock plan benefits which were conferred during the marriage but are contingent on continued employment after the marriage, the court should consider whether the benefits represent consideration for past services or an incentive for future services, and then should determine the marital portion of each component by applying time rules.
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NEW YORK: De Jesus v. De Jesus, ___ Misc. 2d ___, 620 N.Y.S.2d 704 (Sup. Ct. 1994).
Stock options received by the husband were wholly marital even though he could not exercise them before the commencement of the divorce action; the wife would be awarded the right to exercise one-half of the options as they matured.
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OHIO: Murray v. Murray, No. CA98-08-097 (Ohio Ct. App. Feb. 8, 1999)
The issue raised in the Ohio Court of Appeals was whether unexercised stock options should be included in "gross income" for purposes of determining child support and, if so, how to value the stock options.
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PENNSYLVANIA: Fisher v. Fisher, Nos. 170, 171 (Pa. Sup. Ct. Apr. 25, 2001).
Wife appealed the trial court's finding that unvested stock options do not constitute marital property and are not subject to distribution in a divorce proceeding.
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PENNSYLVANIA: MacAleer v. MacAleer, 725 A.2d 829 (Pa. Super. Ct. 1999).
Where a stock option is granted to a spouse during the marriage as compensation for services also rendered during the marriage, such an option constitutes marital property even if the right to exercise the option does not mature until after separation.
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TEXAS: Bodin v. Bodin, 955 S.W.2d 380 (Tex. App. 1997).
The husband's unvested stock options constituted a contingent property interest and were therefore a community asset.
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