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Dividing business executive benefits during a high-asset divorce

On Behalf of | Aug 10, 2023 | Divorce |

Business executive benefits encompass a range of perks and incentives typically awarded to top-level executives within a company. These benefits go beyond a traditional salary and can include bonuses, stock options, deferred compensation, retirement plans, health benefits and more.

These comprehensive packages are designed to attract and retain top talent and align executive interests with the company’s long-term success. In the intricate world of high-asset divorce proceedings, the valuation and division of business executive benefits can pose a challenge, considering they’re intangible assets. These are the common valuation methods and the considerations that tend to come into play during high-asset divorce cases.

Valuation of business executive benefits

Valuing business executive benefits in the context of a high-asset divorce involves:

  • Determining the present and future worth of these benefits
  • Taking into account vesting schedules
  • Factoring in tax implications
  • Considering market volatility
  • Considering the projected growth of the company

Stock options and equity awards are common components of executive compensation packages. Valuing these benefits requires thoroughly assessing the company’s financial health, market conditions and the potential for stock appreciation. In divorce cases, valuing unvested stock options and restricted stock units (RSUs) can be particularly challenging due to their contingent nature.

Deferred compensation plans, often used to retain executives over the long term, also need careful consideration. The valuation process must account for the timeline over which the compensation will be received, potential interest or investment growth and the tax implications for both the executive and their former spouse.

Pension plans and retirement benefits can also be substantial assets in high-asset divorces. Valuation requires analyzing the terms of the plan, including vesting periods, payout structures and potential survivor benefits. Divorcing couples need to address how these benefits will be divided and whether they are subject to equitable distribution under New Jersey law.

Division of business executive benefits

New Jersey follows the principle of equitable distribution, which means that marital assets are divided fairly but not necessarily equally in the event of contested cases. This approach generally applies to business executive benefits acquired during a couple’s marriage.

However, it’s important to note that pre-and post-nuptial agreements can significantly impact the division of executive benefits. These agreements outline how these benefits will be treated in the event of divorce and can override default equitable distribution laws if they are deemed valid by the court.

Business executive benefits are often intricate components of high-asset divorce cases. Their valuation and division demand careful attention to financial intricacies and legal considerations. Parties embarking on such divorce proceedings should strongly consider engaging knowledgeable legal professionals to help navigate the complex landscape of such scenarios in order to secure a fair and just outcome.



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