Risky Business: How California Divorce Law Endangers Your RSUs
Restricted Stock Units (RSUs) are a common
form of compensation around the country for
tech industry entrepreneurs and employees
Few people who hold RSUs in their asset
portfolio, however, understand that California
divorce law puts those RSUs at risk, even if the
RSUs have not yet vested.
At the law firm of Kaspar & Lugay LLC, we
want to build awareness of this issue for the
industry we serve.
BY REVIEWING THE
SLIDES BELOW, YOU
WILL FIND OUT:
• How California treats property
differently than other states do
• What features make RSUs unique
from other assets
• The implications of vague California
laws with respect to RSUs
In What Way Does
California Law Put You At
Risk Of Losing Your RSUs
When Dividing Property
During Your Divorce?
CALIFORNIA IS A
Most states divide property in divorce equitably
(i.e., not necessarily equally, but what the court
California, however, is called a community
property state. Property here is divided
according to the courts determination of
what each spouse contributed.
RSUs DO NOT ALL VEST AT THE SAME TIME
When you received your RSUs, they did not all vest immediately. Many, in
fact, vested on a rolling basis and only upon the meeting of certain
As a result, depending on when you and your spouse separate, some stock
may have vested, other stock may not have vested while other stock may
be for either past or future performance.
When it comes to dividing RSUs, California law
follows no single rule.
In fact, the courts in California are allowed to
craft a different solution for each different
The Legislature Has Not Acted
To Change This State Of
Affairs. At Least At This Point,
Therefore, It Appears The
Courts Are Being Left To Craft
Solutions Tailored To Each
As a result, each new or
different fact in a case can
mean a dramatically
outcome from other cases
that on first glance would
seem to be similar.
For that reason, if you hold RSUs
and are considering divorce or
are already involved in a divorce,
you will want to consult with an
experienced attorney who can
advise you intelligently in this
unclear and still-developing
area of law.