Equity compensation can be one of the most valuable and misunderstood assets in a high-net-worth divorce. Stock options, RSUs, carried interest, and other equity awards often come with vesting schedules, restrictions, and tax consequences. Values can change quickly, and many awards are not liquid or transferable.

If equity is part of your divorce in Massachusetts, two steps matter early: identify what exists and choose a fair, workable method to value and divide it before you agree to a settlement.

1) Equity comes with rules, not just a value

Equity awards are governed by plan documents and grant agreements between the company and employee. Two awards that look similar can lead to very different outcomes depending on:

• Type of award (options, RSUs, profit interests, partnership units, phantom equity)
• Vesting terms (time-based or performance-based)
• Transfer restrictions (common with private companies and funds)
• Liquidity (public stock versus private equity interests)
• Tax treatment (which can change net value significantly)

In Massachusetts, equity may be considered in property division even if it has not vested yet, depending on what the award was meant to compensate, when it was earned, and the vesting schedule.

2) Start with identification

Equity is often spread across portals, grant notices, and plan documents, especially for executives and partners with multiple grants over time.

Documents to gather early include:

• Equity plan documents and each grant agreement or notice
• Vesting schedules and any performance criteria
• Brokerage or equity portal statements (or cap table for private companies)
• Distribution history for partnership or fund interests
• Tax documents (W-2, K-1, 1099)
• Company policies on transferability and divorce-related orders

This step alone can shift settlement negotiations because it clarifies what is real, what is contingent, and what is restricted.

3) Marital versus separate is often award-specific

With equity, the question is not simply vested versus unvested. The more important question is what the award was intended to compensate.

Some awards are tied to past performance, some are incentives to stay with a company and vest over time, and some are tied to future performance or milestones. That purpose, along with the timing of the grant and the marriage timeline, can inform whether equity is treated as marital property and what portion may be subject to division.

4) Valuation depends on the type of equity

Equity valuation ranges from straightforward to highly technical.

Public company shares and RSUs

Market price is readily accessible, but settlement still needs a clear approach for timing and market changes between separation and division.

Stock options

Options may have significant value or little value depending on strike price, vesting, expiration, and market conditions. Valuation may involve financial modeling or a practical approach that divides proceeds if and when exercised.

Private company equity, carried interest, and profit interests

These can be complex because there may be no market to sell, transfer may be restricted, and value may depend on a future liquidity event. Distributions and fund waterfalls can add additional layers, and some instruments can create present economic benefits even before vesting.

5) Common settlement approaches

Once equity is identified and valued, the next step is choosing a structure that is fair and enforceable.

Offset for a clean break

One spouse keeps the equity, and the other receives more of another asset (cash, brokerage accounts, real estate). This works best when valuation is reliable, and liquidity is predictable.

Deferred division

Spouses share the equity when it vests, is sold, or distributions are received. This can be a better fit when value is uncertain, restricted, or not currently liquid. It is important that the non-employee spouse have some control over whether or not to exercise their shares and when under these circumstances.

Formula allocation

In some cases, an award is divided based on the portion tied to the marital period versus post-separation efforts, depending on the award’s purpose and timeline. Most family law practitioners refer to this calculation as the Baccanti analysis.

Regardless of approach, settlement language should be specific about notice requirements, documentation, taxes and withholding, what happens if employment ends, and how replacement or modified grants are handled.

6) Taxes can change the outcome

Equity can look equal on paper, but not after taxes. RSUs are commonly taxed as ordinary income at vesting. Options can have different outcomes depending on type and timing. Partnership and fund interests may involve K-1s and other complexities. A fair settlement should account for net value, not just the headline number.

Bottom Line
Equity compensation can be one of the largest assets in a high net worth divorce, and one of the easiest to misunderstand. The right strategy depends on the type of equity, the purpose of the award, vesting terms, transfer restrictions, liquidity, and taxes. Getting clarity early can help you negotiate a settlement that is fair, enforceable, and aligned with your long-term financial picture.

Contact Mansur Law Group today at 978-575-8908 to schedule a confidential consultation & to learn more.

This article is for informational purposes only and does not constitute legal advice. Every case is different.

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