Puja Sachdev | June 14, 2025 | Divorce
Divorce can be complicated, especially when financial assets like stock options are involved. If you’re getting divorced in California, you may wonder how the court will handle these valuable investments. Learning about how California law treats stock options in divorce can help you prepare and protect your financial interests.
In this blog post, we’ll clearly explain how stock options are divided in a California divorce and what you can expect.
Are Stock Options Community Property in California?
California is a community property state in terms of how it handles property division in a divorce. That means most assets and debts acquired during marriage belong equally to both spouses. If your stock options were earned during your marriage, the court will generally view them as community property. This usually means they must be divided equally.
However, if the stock options were given before your marriage or after your separation date, the court may classify them as separate property. Separate property remains with the spouse who owns it and is not split during divorce.
How Does California Divide Stock Options?
Because stock options can’t always be easily divided, California courts typically take several steps:
- Valuation: The first step is determining the worth of your stock options. The court often consults financial experts to determine their fair value.
- Allocation: Next, the court decides how many stock options were earned during marriage versus before or after marriage. Only options earned during marriage will usually be split between spouses.
- Distribution: Finally, the court divides the marital portion of the stock options. Options might be divided equally, or one spouse may buy out the other spouse’s share.
These steps help ensure stock options are divided fairly between both spouses.
How Do Courts Value Stock Options in a California Divorce?
Valuing stock options accurately can be tricky. Typically, California courts look at factors like:
- The grant date of the stock options
- When the options become vested (meaning you can exercise or sell them)
- The current market price and potential future value of the stock
Financial experts are often needed to assess these factors properly. This helps determine exactly how much your stock options are worth and what portion of that value should be split in the divorce under California’s community property law.
Can Stock Options Be Divided Without Selling?
Stock options can often be divided without immediately selling them. In some cases, spouses agree that the employee spouse will keep the options but pay the other spouse half the current or future value. In other cases, the non-employee spouse receives other marital property of equal value instead.
This type of arrangement lets the spouse who earned the stock options keep them intact while still giving the other spouse fair compensation.
What Happens if Stock Options Aren’t Fully Vested?
Stock options that aren’t fully vested at the time of divorce can create additional challenges. California courts typically use the “time rule” formula to address these issues.
This formula considers things like:
- How long the couple was married while the stock options were being earned.
- How much of the total vesting period occurred during the marriage.
This helps the court fairly divide unvested options based on the portion earned during the marriage.
Contact an Experienced California Divorce Lawyer for a Free Case Evaluation
Dividing stock options in a California divorce can be complex. At San Diego Divorce Lawyers, APC, our skilled divorce attorneys can clearly explain your rights, help you value stock options accurately, and ensure you receive your fair share. Contact our experienced San Diego divorce lawyers at San Diego Divorce Lawyers, APC, today for legal assistance. Contact us at (619) 866-3756 to schedule a complimentary case evaluation.
We proudly serve throughout San Diego County. We are located in San Diego, California.
San Diego Divorce Lawyers, APC
2851 Camino del Rio S #430
San Diego, CA 92108
(619) 866-3756
