Dividing property in a divorce in Florida is one of the key issues that both parties must resolve, either through a mutually acceptable agreement or through a court order.
The divorce court in Florida will classify marital and non-marital property while dividing assets during a divorce. Here are a few lesser-known or poorly understood facts about property division in a Florida divorce – particularly, business assets.
Dividing Stock Options is a Complex Issue
One of the more complicated aspects of marital property division in Florida is how to split stocks in a divorce. A spouse may have earned stock options based on his or her past job performance, or an employer may have provided stock options as compensation to retain and incentivize.
Valuation of stock options in a divorce can be difficult, particularly when the company is a startup or a fledgling enterprise with a promising future and no proven track record of success.
Methods to Value Stock Options Can Have Limitations
Stock options after divorce will be divided based on the market valuation of the company’s stock. Two common methods of stock option valuation include the “intrinsic value” method and the “Black-Scholes” method.
Parties seeking a divorce in Florida are often unaware that both methods come with their own limitations. It is important to choose an appropriate valuation method that does not put you at a disadvantage.
Intrinsic Value Method
Under this method, the value of the stock option is based on the difference between the option grant price and the current fair market value (FMV) of the stock option when exercised.
For example, if you received the stock options from your employer at 5 dollars per share, but the FMV at the time of exercising the options is $30, the intrinsic value would be taken as $25 per share.
This method of stock option valuation may be more appropriate for the purpose of dividing assets, but it also has some limitations. However, accounting professionals recognize this as a more formal method of valuing stock options.
Determining the valuation involves two parts: (a) computation of the expected benefit of buying the stock outright, and (b) computing the current value benefit of paying the option exercise price in the future. Whatever is the difference between these two amounts will be considered to be the value of stock options.
Splitting Business Assets is Often the Trickiest Part in a Florida Divorce
One of the trickiest aspects of a Florida divorce is to determine whether the business is a marital or a non-marital asset. Even when business is recognized as a marital asset, the valuation and division of business assets can be very complex.
If a spouse owned a business before marriage or used pre-marital funds to set up the business during marriage, the business is considered non-marital property. However, this is not the final analysis.
A business that is otherwise considered a non-marital or separate property may become marital property in a Florida divorce if a spouse transfers a part of the business interest to the other spouse.
Valuation of intellectual property, goodwill, and other intangible assets in a business can also present challenges while splitting business assets in a divorce.
Call an Experienced Florida Divorce Lawyer Today!
When stock options or business assets are part of the marital estate, you need expert legal representation from a highly skilled and resourceful divorce attorney in Florida. Patrick Cordero will be personally involved with your case. Contact the Law Offices of Patrick Cordero, PA today at 305-445-4855 or contact us online to schedule a consultation.