What You Need To Know About Divorce And Executive Compensation

On Behalf of | Mar 16, 2023 | Divorce |

Divorce is difficult enough without considering the financial implications, but things can get even more complicated when it comes to high-net-worth individuals. One of the key issues that arise in high-asset Colorado divorces is the division of executive compensation, which can include things like stock options, bonuses and deferred compensation plans.

Executive compensation

Executive compensation refers to the financial rewards and benefits that high-ranking executives receive from their companies. This can include a base salary, bonuses, stock options, restricted stock units and other forms of equity. Executive compensation is often tied to the company’s performance, so the better the company does, the more the executive can earn.

Executive compensation can be quite lucrative, but it also comes with several risks. One of the biggest risks is that it can be subject to fluctuations in the stock market, which can significantly impact an executive’s net worth. Additionally, executive compensation is often tied up in long-term incentive plans, which means that it may not be immediately accessible in the event of a divorce.

Divorce and executive compensation

In a divorce, executive compensation can be a significant point of contention. Depending on the laws of your state, executive compensation may be considered marital property and subject to division between you and your spouse. Your spouse may be entitled to a portion of your equity.

If you have many stock options that have not yet been vested, it can be difficult to determine their value. Additionally, deferred compensation plans can be challenging to divide, as they may not be accessible until a future date.

Protecting your assets

If you are concerned about protecting your executive compensation in the event of a divorce, there are some steps you can take. One of the most important is to work with a divorce attorney with experience dealing with high-net-worth divorces.

Another option is to enter into a prenuptial or postnuptial agreement. These agreements can outline how your executive compensation will be divided in the event of a divorce, which can help to minimize disputes and ensure that your assets are protected.

Secure your financial freedom

Divorce is never easy, but when it comes to high-net-worth individuals, the process can be particularly complex and costly. If you are an executive with significant assets tied up in executive compensation, taking the necessary steps to protect your assets is essential. Doing so can help ensure that your financial future remains secure, even in the event of a divorce.