Stock options are marital property in Georgia only to the extent the spouses’ work or money during the marriage produced them.
Options That Vested Before the Marriage
In Payson v. Payson, 274 Ga. 231 (2001), the wife exercised Home Depot options that had vested before the marriage, paying with premarital assets. The trial court treated her whole stock account as marital. The Georgia Supreme Court reversed: that stock “was not marital property subject to equitable division since it was not generated by the marriage or accumulated during the marriage,” and growth caused only by market forces was not marital either.
Options Paid For With Marital Money
In Thomas v. Thomas, 259 Ga. 73 (1989), the husband exercised options earned before the marriage with marital funds and borrowed money. The trial court treated $38,967 of his separate property as marital, to restore money the wife had given him before the wedding. The Supreme Court reversed: classifying property “is not a discretionary function,” and the case went back so the marital part of the stock proceeds could be set aside and divided.
Options Granted Before, Vested During
In Newman v. Patton, 286 Ga. 805 (2010), all of the wife’s options were granted before the marriage, and 83,757 vested during it. The trial court held those marital because they vested during the marriage and were akin to deferred compensation. The Supreme Court reversed: vesting during the marriage “is not determinative in and of itself.” The question is whether the vesting was “the direct result of the parties’ labors and investments during the marriage,” considering, among other things, whether marital or premarital funds paid for the exercise and whether the employer granted the options for past, present or future service. The court then chooses the best formula for apportioning the marital share, such as a time-rule formula.
How taxes on divided options are figured should be spelled out too; our post on ambiguous divorce decrees shows why.
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This post is a quick overview of the law and is not intended as legal advice. Please feel free to contact our office for a consultation if you have questions about this or any other legal aspects regarding your case!