Dividing Stock Options In A Divorce – Part III

In Part I of this topic, I discussed how stock options are characterized as marital or separate property.  Part II of this topic addressed the valuation and distribution of stock options in divorce actions.  This last in the series, Part III, discusses the information needed to divide stock options in divorce.

Each case involving stock options is fact specific.  The employee spouse who holds the options must share information with the non-employee spouse.  The parties should exchange the following general information to properly characterize, value and divide stock options.

•    The employer stock option plan
•    Any Summary Plan Description
•    All documents actually granting an option to the employee
•    All documents describing why the employer grants the options
•    Any benefit statements describing outstanding options
•    Any reference in the Employee Manual to any stock option program
•    Any documents amending an option plan or an option grant

This is a good starting point for locating the information you need.  Request more information if you are not sure of the following:

•    The number of shares granted to the employee for each option
•    The purpose of the grant
•    The grant date
•    The vesting date
•    Any preconditions before vesting occurs
•    The date of exercise of any grants
•    The expiration date
•    The strike price (the price at which the employee may buy the shares)
•    The tax treatment of any award (ordinary income or capital gains), and how the tax will be paid
•    Any amendments to the option plan, or any options granted
•    Whether the options are transferable (not likely, but you might get lucky)

by David A. Tracy

Time to Check Your Will After Supreme Court Denies Survivor Benefit for Twins Conceived After Father’s Death

A U. S. Supreme Court decision this week serves as a wake-up call for careful drafting or amending of your Last Will and Testament.  It is also a call to action for state legislatures.  The Court denied a Florida mother survivor benefits for twins conceived by in-vitro fertilization (IVF) after her husband died.  The court held unanimously that Karen Capato could not collect survivor benefits for the twins from the Social Security Administration (SSA).  She had the twins 18 months after her husband died, using his frozen sperm.

SSA turned the application down because Capato’s twins, who were conceived posthumously, did not qualify to inherit from their late father under Florida law.  The court states that SSA properly looked to state law to determine the children’s eligibility for the federal entitlement.

The effect of this U. S. Supreme Court decision in Oklahoma is unclear.  There is no state statute or case law discussing the inheritance rights of children conceived by mothers using the frozen sperm of a deceased father.  According to this article from National Public Radio, thirteen states have laws that specifically allow posthumously conceived children to inherit in cases where there is no will. Four states, including Florida, specifically do not allow it.  In the rest of the country, as in Oklahoma, the law is unclear.

It is a growing phenomenon for persons with life-threatening illnesses or hazardous job duties (like soldiers headed into combat) to store sperm for later use.  If you have stored sperm, there is a lesson for you in this weeks’ Supreme Court case.  Please contact an attorney promptly to draft or amend your Last Will and Testament. You need to include a clause that children conceived by IVF after your death should (or should not) be treated as your other surviving children.

For those who don’t have a Last Will and Testament, this issue needs to be addressed by the Oklahoma Legislature.  I think children conceived through IVF, even after the father has passed away, should be treated the same as children born while both parents were alive.  Oklahoma lawmakers can, and should, make this happen.

Please share your thoughts on the case of Astrue v. Capato in the Comments section below.

by David Tracy