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Executive compensation and divorce

If you’re in the process of divorcing someone who is high up in the business world in Arizona and has substantial assets, be wary of executive compensation. The expression “More money, more problems” certainly applies to these types of divorces. Restricted stock awards and stock options are just two potential items out of a long list of things you’ll need to be aware of and learn about as you go through your divorce proceedings.

Exacerbating an already complicated process

Due to the large number of significant assets your spouse may have, their various financial holdings are likely to be anything but simple to understand. This is just one more thing to worry about in an already complicated and emotionally taxing experience.

Who gets executive compensation?

Executive compensation is historically something that is reserved for high-power executives. However, an increasing number of employees are given incentives like restricted stock plans and stock options. The number of people with executive compensation is projected to continue on this upward trend in the coming years.

Since an incentive compensation plan isn’t something that usually shows up on a person’s tax return, it isn’t very difficult to hide it during divorce proceedings. For that reason, it may be a good idea to pay close attention to ensure that you receive the share that you’re entitled to.

Don’t underestimate the taxes

Thinking about how executive compensation will impact your taxes should likely be a major consideration in the way you split up the assets. Without factoring this in, you might come away with a vastly inaccurate figure when determining the value of your assets.

The amount that you’ll have to pay depends on the tax bracket that you fall in. Being taxed around 40% or even higher is common, so watch out for any stock option that seems too good to be true.