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Are unvested restricted share units (RSUs) marital property?

Restricted share units (RSUs) are a type of equity compensation. Many public companies that in the past issued stock options have now moved toward restricted share units. Disney, Amazon, and Darden are some Orlando-area employers that offer restricted share units to executives and key persons.

There are no reported cases in Florida that specifically address the division of restricted share units in divorce. However, restricted share units are so similar to stock options and restricted shares that there would be no reason to treat them any differently. Many Florida cases address equitable distribution of stock options and restricted shares in divorce.

In Florida, unvested stock options and restricted shares granted during marriage are not marital property if their vesting depends on post-marital job performance. This is because their value is realized through non-marital (post-divorce) labor.

Unvested stock options and restricted shares granted during marriage as deferred compensation are at least in part marital property. See Parry v. Parry, 933 So. 2d 9 (Fla. 2d DCA 2006) (“An award that is in the nature of deferred compensation and that is granted during the marriage is usually a marital asset because it is compensation for past marital labor.”). In these cases, a “coverture formula” is applied to determine the marital versus non-marital portion of the restricted share units. The marital portion is determined by a percentage equal to the marital vesting time vs total vesting time, multiplied by the value of the vested shares at post-vesting distribution.

Unlike stock options and restricted stock, the 83(b) special election is not available for restricted share units because no actual shares are delivered at the time of the grant. This can simplify some of the tax considerations involved in equitable distribution of restrictive share units in divorce.

Call DeVoe Law Firm at 407-284-1620 for assistance resolving equity compensation issues in divorce.

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