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3 Ways to protect your interest in a high-asset divorce

On Behalf of | Nov 13, 2023 | Divorce, High-Asset Divorce

When you’re going through a high-asset divorce in California, one of the most difficult issues to deal with is executive compensation. Executives often receive substantial compensation packages that can include bonuses, stock options, and deferred compensation,

These types of situations can complicate the division of assets. Unfortunately, many of these assets often get left on the table during negotiations. Here are five ways to effectively handle executive compensation when you’re going through a high-asset divorce

Investigate the compensation package

Executive compensation isn’t easy to include in high-asset divorces. That’s because many spouses don’t know what’s included in those compensation packages. Unfortunately, most compensation packages remain privileged information between the employer and the employee. Before proceeding with your divorce, it’s important that you understand what assets are contained in the compensation package.

This includes employment contracts, stock option agreements, deferred compensation plans, and any other relevant financial information. When you know what’s included in the compensation, fewer assets get left on the bargaining table during settlement talks.

Consider comparable value assets

In high-asset divorces, some items in the executive compensation package can be too difficult to divide. That doesn’t mean the value of those assets can’t be considered. That’s where comparable assets come into the picture. Using comparable assets ensures an equitable division of assets, without the complications of the executive compensation package.

When you rely on comparable assets, your spouse maintains control of the compensation package, while you receive assets of comparable value. This ensures that you receive a fair and adequate divorce settlement.

Understand the tax implications

If your high-asset divorce involves assets from an executive compensation package, understanding the tax implications is essential. There could be additional tax liabilities when executive compensation packages are accessed, especially with stock options. A tax or financial consultant can help identify tax issues regarding the compensation package.

Navigating a high-asset divorce can be complicated. But, with the right preparation, it doesn’t need to be impossible.