How Stocks Are Viewed and Divided in Divorce

It is possible that stock be considered a marital estate, but it will ultimately depend on the trial court. The court looks to split all marital assets as evenly as possible, including stock options.

The court reviewed stock options in Chen v. Chen 142 Wis.2d 7, 416 N.W.2d 661 (Ct. App. 1987).[1] When stock options are part of the marital estate, the husband and the wife have a presumptive equal interest in them. The marital estate is not to be limited to assets in existence at the time of the parties' separation, but is to include assets, as they exist at the time of divorce.

In the case Arneson v. Arneson, 120 Wis.2d 236, 355 N.W.2d 16 (Ct. App. 1984),[2] the court of appeals decided an appellate court will not disturb a trial court's decision on the valuation of a closed corporation unless it is contrary to the great weight and clear preponderance of the evidence. A trial court in divorce does not have to accept any method of stock valuation as more accurate than another accounting method. The trial court has its own discretion, but will look at the facts of each individual case (length of marriage, length of employment, names on stock) to make a determination regarding marital assets.

Are Gifted Stock Divisible?

The court will consider several variables when deciding separate or marital property. If the stock has not been converted, and remains titled in your name, then more than likely the stock will remain separate property.

When it comes to gifted property, the party which asserts the gifted status must provide the court with credible evidence that the property was, in fact, gifted. If this is contested, the party which is contesting must provide the court with evidence demonstrating that the character and identity of the property has not been preserved.

This is seen in the case of Popp v. Popp 146 Wis. 2d 778, 432 N.W.2d 600 (Ct. App. 1988).[3] In this case, the husband was gifted stock by his father. Among other aspects of the case, the court included his gifted stock into the divisible marital property. The husband appealed, and the court of appeals reversed.

Are Stock Options Divisible?

Absolutely. The court will exercise their discretion on the matter of property division based on the specifics of your case, and stock options are not off the table.

This was seen in the case of Chen v. Chen 142 Wis. 2d 7, 416 N.W.2d 661 (Ct. App. 1987). Here, the husband appealed the property division award believing an error had been made in regards to his stock options, which would not be able to be exercised until after the divorce. The court awarded his wife 50% of the net profits, whatever they may be, when the stock was liquidated. The court of appeals affirmed the decision.

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