Most West Virginia couples going through a divorce won’t have to worry about executive compensation. However, anyone dealing with a high-asset divorce should be aware of what executive compensation is and how it will impact them.
What is executive compensation?
Executive compensation refers to the special sort of salary or compensation packages that are given to high-level executives. Most of the time, this compensation will come in the form of company stock or investment portfolios.
This can be great because executives get the rewards of being an investor in their own company, such as quarterly dividends. However, many stocks and retirement plans must be vested for a certain time period before you can consider pulling out from them.
This can make dividing these stocks difficult in a divorce. Most companies do not allow the transfer of these stocks into a different person’s name, but they’re still counted as part of your assets in a divorce.
Sometimes, non-employee spouses might not know what the executive compensation is or what assets their spouse has from their work. In this case, the non-employee spouse will want to work with their lawyer to find these assets if they’re not volunteered.
How do you handle divorce and executive compensation?
Often, a trust is created to pay out the non-employee spouse at the end of the vesting period for their stock. This arrangement ensures that the spouse gets their share of the stock at the time it can be paid out.
It’s also important that the issue of taxes be addressed when setting up this arrangement. There are typically taxes on pulling from stocks or retirement accounts early, so you should address this in the initial planning process.
Other arrangements can be made with your spouse depending on your relationship and the other assets involved. What’s important is that these compensation packages are addressed at the time of the divorce.