Future Inheritances and Non-Vested Stock Options
The Dissolution Act (the laws the cover divorces) gives wide definition to marital property for a divorce court to divide. This includes property acquired before marriage and brought into the marriage; property acquired by joint efforts, and assets that accumulate during the marriage. The divorce court is to presume no matter what type of property this is before it a presumption is an equal division. However, if just and reasonable a divorce court may deviation.
However, certain property, such as certain railroad pensions, are not martial property by exclusion by statute. This blog address two much more common types of property that are not subject to be divided: “unvested stock options”1 and an inheritance that vests after the filing of the divorce. The date the divorce is filed is the cut-off mark for marital property or all that is contained within the marital pot to divide.
For this reasons, a spouse who has potentially valuable stock options, but which do not vest until after the divorce is filed, are not marital assets the divorce court divide in its discretion. This is because these are valueless unless and until they vest which is generally contingent on future employment. This is the subject of contention in many divorces and a legal tenet that is often challenged but is the established rule of law at this time.
In addition, a spouse who has an expectancy or future interest in an estate by virtue of passing of a relative or otherwise is “property” that is treated as valueless until the testator dies (or one without a will). Therefore, if the total marital estate is worth $100,000 with an inheritance by one spouse of $1,000,000 that becomes vested by virtue of death after filing, the presumption of the trial court is to divide the marital estate $50,000 each.
Knowing these laws is an important part of understanding divorce law in many cases. While these solid legal principles are often challenged, they remain the law in Indiana today. Know the law as it applies to your case to be an informed litigant. This blog post was written by attorneys at Dixon & Moseley, P.C. who handle divorce and paternity cases of all types throughout the State. This blog is written for general informational purposes and is not intended as legal advice or a solicitation for legal services. This is an advertisement.