Divorcing in California With Equity Pay? Here’s How Stock and Bonuses Get Split
If your compensation includes stock options, RSUs, and bonuses, divorce can feel financially uncertain — because a big part of what you earn isn’t paid like a normal paycheck. It’s tied to grant dates, vesting schedules, performance periods, and future payout timelines.
In California, these assets can be divisible even when they haven’t vested or been paid yet. The key is understanding what portion was earned during the marriage versus after separation.
1) The Core Rule: California Focuses on When It Was Earned
California is a community property state, which generally means:
Community property = compensation earned during the marriage (often split 50/50)
Separate property = compensation earned before marriage or after the date of separation
With equity and bonuses, courts don’t just ask “When did you get paid?” They ask:
Why was this compensation awarded?
What time period does it reward — past work, current work, or future services?
2) Stock Options and RSUs: What the Court Usually Looks At
Equity awards are often treated as part community, part separate, depending on timing and purpose. Courts commonly examine:
Grant date: When the award was issued
Vesting schedule: When you actually earn it
Purpose of the award:
Reward for past performance (often more marital/community)
Incentive for continued work/retention (often more post-separation/separate)
Mix of both (very common)
Date of separation: The cut-off line for marital efforts
What this means in real life:
You can be required to share a portion of an award that vests later if it was earned through work performed during the marriage.
A grant that began during marriage but vests mostly after separation may be partially divisible.
3) How Courts Divide Equity When It Spans Multiple Years
California courts often use established time-based formulas to determine:
How much of the vesting timeline occurred during the marriage
How much occurred after separation
The goal is to allocate the award in a way that matches the timing of marital effort — not to guess or split blindly.
4) The Date of Separation Can Change the Numbers
Many people assume separation means the filing date. In California, separation is about a true, final break.
Courts typically look for:
A clear statement that the marriage is over, and
Behavior consistent with that intent (living separately, separate finances, no longer functioning as a couple)
Why it matters:
The date of separation often determines whether equity and bonuses are treated as marital/community or post-separation/separate.
5) Bonuses: Paid Later Doesn’t Always Mean “Not Divisible”
For bonuses, California generally focuses on when the bonus was earned, not when it was paid.
Courts and negotiations often examine:
The earning/performance period (what months/quarters/year the bonus covers)
What triggers the payout (results achieved vs. staying employed)
Employment agreements and bonus plan documents
Past bonus history (especially if the current year’s bonus isn’t known yet)
Common bonus outcomes:
Pro-rated division if the earning period crosses the separation date
Separate property argument if the bonus requires significant post-separation performance or retention
Settlement trade-offs when dividing a future bonus is impractical (one spouse keeps it, the other receives value elsewhere)
6) Documents That Make or Break These Issues
If equity and bonuses are part of your divorce, documentation is everything. Commonly needed records include:
Grant letters and award agreements
Vesting schedules
Equity plan documents (company plan + policies)
Brokerage statements
Employment contracts and offer letters
Bonus plan summaries and HR communications
Pay stubs and prior-year bonus history
Having these early reduces disputes, supports accurate allocation, and prevents surprises.
7) A Practical Way to Think About Strategy
If your compensation is complex, a strong approach usually looks like this:
Identify every grant and bonus plan
Build a timeline against marriage date and separation date
Determine which portions are likely community vs. separate
Consider tax impact, volatility, and cash-flow timing
Negotiate with an eye toward long-term stability (not just “paper value”)
Closing Thought
Stock options, RSUs, and bonuses can shape your divorce outcome and your post-divorce finances for years. The goal isn’t to rush decisions — it’s to get clarity early, document properly, and structure a settlement that reflects what was actually earned during the marriage.
At Moradi Neufer, our California divorce attorneys handle high-income cases involving equity compensation, deferred pay, and complex bonus structures. If you’re navigating divorce and your compensation isn’t straightforward, we can help you understand what’s likely divisible and build a strategy that protects your financial future.
