Stock represents an ownership interest in a publicly-traded company. Those who own stock may have a say in the company’s operations as a shareholder. They can also receive dividend payments when the company generates profit. The stock itself can be a source of income if people sell it for more than they paid for it originally.
Acquiring stock can be a tactic to diversify a portfolio. It can also be a byproduct of a successful career. Some people invest in stock as a way to grow their wealth by earning returns on an initial investment. Other people have employment arrangements that allow them to purchase or outright receive stock in return for meeting performance metrics or staying with the company for a certain amount of time.
Couples with diverse personal holdings may worry about what happens with their assets when they divorce. Stock can be a particularly complicated asset to manage in divorce proceedings. What challenges do couples who own stocks together typically face when they divorce?
Determining what is marital property
Many people with great careers stay at the same company for years. They may have begun accruing stock before they got married. All of their stock may be held in one portfolio, making it quite difficult to analyze how much is part of the marital estate and how much is technically the separate property of one spouse. A thorough financial review is often important for those hoping to divide stock fairly as part of an upcoming divorce.
Setting a valuation date
The price of stock fluctuates drastically throughout a single day and from week to week. That uncertainty and price can be a challenge during divorce proceedings. Spouses typically have to agree on a specific valuation date when determining what their shared assets are worth.
Addressing stock they cannot sell
Particularly when someone receives stock as an employment perk, they may not be able to liquidate it during a divorce. Offering employees restricted stock is a common practice that allows the company to provide competitive compensation packages. Spouses may have to value the stock and then offset its worth with other marital resources or marital debts.
People with more complex holdings often find dividing their property during divorce to be more difficult than average. Identifying assets that can lead to divorce complications early can lead to smoother negotiations and a better final divorce outcome.