High earners in Maryland may have additional considerations when they decide to divorce. While people of any financial status or profession may struggle with the emotional, practical and legal considerations that come with the end of a marriage, property division is often more complicated for couples with substantial assets. As a result, high-value divorce cases involving spousal support and disputes over property may be complex or heavily contested.
Executive compensation may be substantial
While high-ranking executives often have a large salary, their annual compensation is not calculated only through their regular pay. Executive compensation, such as stock options or restricted stock plans, is a common benefit for key employees, managers and directors. Incentive compensation can be an important mechanism of retaining employees and providing potential significant wealth for the future, depending on the progress of the company. Over 15 million people nationwide have stock options and similar plans, and many veteran employees at large tech firms and other fast-growing companies have become wealthy due to these options.
Complications in dividing incentive compensation
Dividing stock options and similar assets in a divorce can be a complicated prospect, however. Stock options and restricted stock typically cannot be transferred like other assets; instead, alternatives like trusts may need be created to benefit the other spouse. Tax ramifications must also be considered when pursuing a divorce settlement, because failing to consider the tax consequences of exercising stock options may lead to one party paying an unfair burden. While the financial aspects of property division may be complex enough, other couples may face disputes when one party attempts to hide their executive compensation from the divorce court. For high-earning couples that decide to divorce, extensive documentation and transparency is key to achieving a fair settlement.