Dividing stocks in a divorce in GA 2023

Dividing stocks may be a part of a divorce in GA. Stocks may be divided in a divorce in Georgia according to the same standard used in the division of marital property, i.e., equitable division.

How dividing stocks in a divorce in GA works

“Only property acquired as a direct result of the labor and investments of the parties during the marriage is subject to equitable division … A property interest brought to the marriage by one of the marriage partners is a non-marital asset and is not subject to equitable division since it was in no sense generated by the marriage.” Payson v. Payson, 274 Ga. 231 (Ga. 2001).

Further, “[t]he appreciation in value of a non-marital asset during the marriage is a marital asset subject to equitable division if the appreciation is the result of the efforts of either spouse or both spouses, but to the extent the appreciation is only the result of market forces, it is a non-marital asset and therefore not subject to equitable division. Whether the appreciation in value of the non-marital asset is due to market forces or to the individual or joint efforts of the spouses is a question of fact….” Payson.

The law as stated in the Payson case could be applied to dividing stocks in a divorce in GA.

How do stocks get divided in a divorce?

If a spouse purchased some stocks during the marriage with marital funds, then those stocks would be subject to equitable division in a divorce in GA.

Are stocks bought before the marriage marital property?

If a spouse purchased some stocks prior to the marriage, that spouse’s property interest in those stocks is not marital property subject to equitable division. However, the analysis does not stop here. If there was any appreciation in the value of those stocks during the marriage due to individual or joint efforts of the spouses (and not due to market forces), the amount of such appreciation may be divided in a divorce in Georgia. On the other hand, any appreciation due purely to market forces may be considered separate property and not divided in a divorce in Georgia.

Similar analysis may be applied to a situation where a spouse obtained stock options at her place of employment that became vested prior to the marriage and then that spouse exercises such stock options with her separate funds during the marriage.

Dividing stock options

In a situation where a spouse obtained stock options at her place of employment prior to the marriage and those stock options became vested during the marriage, “the trial court [is] required to look at the evidence and determine whether the vesting of the previously awarded stock options was the direct result of the parties’ labors and investments during the marriage. If the previously awarded stock options vested because of efforts made by either party during the course of the marriage, then they are marital assets; otherwise, they are [the spouse’s] separate property.” Newman v. Patton, 286 Ga. 805 (Ga. 2010).

The following factors may be considered by the court in determining this issue and dividing stock options, if any:

• whether the marital or premarital funds were used to exercise the options;
• the employer’s purpose for granting the option (i.e., for past, present or future service);
• the best formula for apportioning the marital share of the options based on the purpose and timing of the options in relation to the time of the marriage;
• a method of distribution to the other spouse; and
• the parties’ tax obligations resulting from distribution.

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