Dividing Restricted Stock Units in Divorce


Other than determining child custody and support, dividing assets is the most critical component of nearly every divorce. It all comes down to a central question: what did you acquire or earn during marriage, and how do we break it up?

Marital assets such as a house or consistent salary may be straightforward, while investments, retirement accounts and other assets add layers of complexity. If you or your spouse hold significant restricted stock units (RSUs), you need a skilled divorce lawyer to ensure they are divided equitably.

Are RSUs Part of the Marital Estate?

RSUs are marital assets if they were acquired, in whole or in part, during your marriage. They are subject to equitable distribution, similarly to investments, 401(k) plans and pensions. But equitable distribution differs for every divorcing couple and depends on a long list of factors that the court considers.

RSUs are more complex than other marital assets due to their vesting period, which can span a number of years. If not fully vested at the time of divorce, division requires additional discretion and often the formation of a constructive trust. Once the tranches are fully matured, they can be split into marital and non-marital assets—and then divided accordingly.

How are RSUs Divided in Divorce?

Like pensions, RSUs can be divided into the marital and non-marital portion using a coverture formula, often called the “Hunt” formula.

The Hunt formula is the number of months in which the RSUs vested during marriage divided by the total number of months in which the RSUs vested (inclusive of the months during marriage).

The result of the Hunt formula is a multiplier that determines what percentage of the total RSU value is marital. From there, that marital portion is divided with a qualified domestic relations order, just like a 401(k) or pension.

The Hunt formula seeks to answer that critical question mentioned above: what did you acquire or earn during the marriage, and how do we break it up? The timeline below illustrates potential answers.

Example RSU Division Timeline:

Year 1 of Marriage

Tranche 1 is Granted

Year 2 of Marriage

Tranche 1 is 33% Vested Tranche 2 is Granted

Year 3 of Marriage

Tranche 1 is 66% Vested Tranche 2 is 33% Vested Tranche 3 is Granted

The Parties Divorce is Entered After Year 3 and Equal Division of the Marital Estate is Ordered

At the time of the judge’s orders: Tranche 1 is fully Vested and Divided Equally Tranche 2 is 66% Vested Tranche 3 is 33% Vested Tranche 4 has been Granted

Year 1 After Divorce

Tranche 2 is fully vested. Since it was 66% vested at the time of divorce, 66% is marital and divided equally. The spouse without the RSUs receives 33% and the spouse with the RSUs receives the remaining 67%, accounting for half of the marital portion and the entire non-marital portion.

Year 2 After Divorce

Tranche 3 is now fully vested. Tranche 3 was 33% vested at the time of the divorce. As such, the spouse without the RSUs receives 16.5% of Tranche 2 and the spouse with the RSUs receives the remaining 83.5%.

Year 3 After Divorce

Tranche 4 is now fully vested. Since Tranche 4 was granted, but not vested, at the time of the divorce, no portion of this Tranche is included in the marital estate.

Year 4 of Divorce

Your marital RSUs have fully vested in previous years, and you no longer have joint assets with your former spouse. With the exception of ongoing support payments, your finances are separated.

Alternatives to Dividing RSUs

If you or your spouse would like to avoid dividing your RSUs, there are alternatives available to you—such as receiving offsets for the disparate values of your assets.

marital balance sheet provides different ways to separate your assets—though you’ll eventually need to go into much more detail on your financial affidavit.

Amicable divorces, collaborative divorces and mediation make these compromises possible. In any route, including litigation, our attorneys will find the best solution for your family.

Contact Our Divorce and Family Law Firm to Divide Complex Marital Assets

It’s critical to work with attorneys who are experts in financial matters—and who can ensure you get your fair share of your marital estate. If you need the support of a divorce attorney specializing in complex finances, reach out to our team. We’re accepting new cases and you can book a consultation online today.

For a free consultation, call Stern Perkoski Mendez at (847) 868-9584 or contact us.