McCrea & McCrea | Bloomington Law Firm For Over 85 Years

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McCrea & McCrea | Bloomington Law Firm For Over 85 Years
812-650-4425

Guiding You Through Life’s Transitions With Compassion And Experience

Dividing Restricted Stock Units (RSUs) And Tech Equity In An Indiana Divorce

In Bloomington’s expanding tech and biotech sectors, compensation often extends far beyond a standard paycheck. For many professionals, restricted stock units (RSUs) and stock options represent a significant portion of their wealth—and a primary point of contention during a divorce.

At McCrea & McCrea, we blend 85 years of local legal tradition with a sophisticated understanding of modern financial assets. We help clients navigate the unique tax and valuation challenges that come with tech equity, ensuring your financial future remains secure.

Are RSUs Considered Marital Property In Indiana?

One of the most complex questions in a Bloomington high asset divorce is whether Restricted Stock Units (RSUs) qualify as marital property. Indiana follows a “one-pot” theory, meaning nearly all assets acquired during the marriage are subject to division.

The status of RSUs often hinges on the vesting schedule. Generally, if the right to the RSUs was granted during the marriage as compensation for past service, they are considered marital assets—even if they have not yet vested. However, if the RSUs are intended as an incentive for future service performed after the filing date, a portion may be excluded. Our role is to ensure the court correctly identifies which shares belong in the marital estate and which are your separate future earnings.

How Courts Approach Dividing RSUs And Tech Equity

Dividing tech equity is not as simple as splitting a bank account. Because RSUs often “vest” over several years, Indiana courts frequently use a co-verture fraction (or “Time Rule”) to determine what portion of the equity belongs to the marriage.

This formula creates a ratio based on how much time you worked toward the vesting goal while married versus how much time occurred after the filing date. Our firm works with financial experts to ensure this math is accurate, as even a small error in the fraction can result in a significant loss of capital.

Common Methods for Distribution

Depending on the company’s plan and your tax situation, we help clients pursue the most advantageous distribution method:

  • The “wait and see” approach: Assigning a specific percentage of future shares to the non-employee spouse to be distributed only when they actually vest.
  • The net-value offset: Calculating the current present value of the RSUs (minus estimated taxes) and “trading” that value for another asset, such as equity in the family home or a retirement account.
  • Constructive trusts: If the employer prohibits the direct transfer of unvested shares, we can draft language that requires the employee-spouse to hold the other’s portion “in trust” until the distribution date.

Why “Face Value” Is Often The Wrong Number For Your Settlement

One of the biggest mistakes in a Bloomington divorce is treating RSUs like cash. On a brokerage statement, an RSU might show a “face value” of $100, but that is rarely what you actually take home.

We look past the surface numbers to protect you from two major financial traps:

  • The tax bite: Unlike standard stock, RSUs are taxed as ordinary income (often 30%+) the moment they vest. If you agree to a settlement based on “gross” value, you could end up paying 100% of the taxes on an asset you only kept half of. We advocate for “net-value” calculations to ensure the division is truly fair.

  • Market volatility: RSUs are “paper wealth” until they vest. Trading a stable asset, like a house or 401(k), for unvested stock is a gamble. If the stock price drops before the vest date, you could lose a significant portion of your settlement.

At McCrea & McCrea, we don’t just accept the numbers on a screen. We ensure your settlement accounts for tax withholdings and market risk so you aren’t left with an empty promise.

Securing Your Financial Future

Dividing tech equity is about more than just today’s stock price; it’s about preventing future disputes. Vague settlement language can lead to years of conflict over tax responsibility or vesting changes. At McCrea & McCrea, we focus on drafting precise, clear terms that provide a predictable outcome, allowing you to move forward with confidence.

Let Us Guide You

If you are concerned about dividing RSUs in a Bloomington divorce, we are here to protect your interests. Call us at 812-650-4425 or fill out our online form to get started today. Consultations are free.