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Risky Business: How California Divorce Law Endangers Your RSUs


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Explains how vague California marital property divorce laws expose restricted stock units to lose during a divorce.

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Risky Business: How California Divorce Law Endangers Your RSUs

  2. 2. Restricted Stock Units (RSUs) are a common form of compensation around the country for tech industry entrepreneurs and employees alike. 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.
  3. 3. 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
  4. 4. In What Way Does California Law Put You At Risk Of Losing Your RSUs When Dividing Property During Your Divorce?
  5. 5. CALIFORNIA IS A COMMUNITY PROPERTY STATE Most states divide property in divorce equitably (i.e., not necessarily equally, but what the court considers fair) California, however, is called a community property state. Property here is divided according to the courts determination of what each spouse contributed.
  6. 6. 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 conditions. 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.
  7. 7. CALIFORNIA LAW IS VAGUE 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 situation.
  8. 8. 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 Particular Case.
  9. 9. 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.
  10. 10. 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.
  11. 11. © 2017 by Kaspar & Lugay LLP. All Rights Reserved. Design and editorial services by FindLaw, part of Thomson Reuters. Share the white paper: FIND OUT MORE ABOUT RSUs IN CALIFORNIA. Learn about how California divorce law puts your RSUs at risk by downloading our free white paper, “Risky Business: How California divorce law endangers your RSUs.” You can also visit us online.