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What happens to stocks in divorce?

If you have spent time, money, and effort building a solid stock portfolio, divorce could significantly impact the support that those stocks provide. How will the court handle your investment portfolio, stock options and restricted stock?

Are your investments separate or marital property?

When did you acquire the stocks in your portfolio? If you began to build your stock portfolio before your wedding, the court might consider that portion of your stocks separate property already. However, the court generally considers stocks that you acquired after your wedding to be marital property unless you have a prenuptial agreement in place to protect these specific assets.

Your marital assets will not just include stocks purchased during your marriage. Stock options and restricted stock, while you may not have vested these stock options, fall under the category of marital property if you acquired them after your wedding.

What are your investments worth?

No matter how much you focus on safe and reliable investments, the value of the stocks you purchase can vary depending on various market factors. This changing value makes establishing the value of your portfolio during property division more difficult. You may need to consult a financial professional to establish the value of your stock portfolio.

Valuing your investments becomes much more complex when your portfolio includes stock options and restricted stock. Some Illinois cases have indicated that the court cannot properly evaluate the worth of stock options that have not yet been exercised. As a result, the court might defer the division of these options until the stocks are vested at some point in the future.

While dividing the stocks in your investment portfolio can be challenging, a carefully built legal strategy can ensure that you continue to benefit from these investments after you enter the next stage of your life.