How Are Stock Options Divided in a Minnesota Divorce?

If you or your spouse receive stock options or restricted stock units (RSUs), you may be wondering: What happens to those in a divorce?

In Minnesota , stock options are often considered part of the marital estate. But unlike a house or bank account, they are not always easy to value or divide—especially if they haven’t vested yet.

Here’s what you need to know.

Are Stock Options Considered Marital Property?

The short answer: they can be.

In Minnesota , property acquired during the marriage is generally considered marital. That includes many forms of compensation—like stock options.

However, it’s not always that simple. Courts look at questions like:

When were the options granted?
Were they earned during the marriage?
Are they meant to reward past work, or to keep the employee at the company in the future?

Because of this, stock options can be:

Fully marital
Partially marital
Or non-marital

What Exactly Is a Stock Option?

A stock option gives an employee the right to buy company stock at a fixed price (called the “exercise price”) at some point in the future.

If the company does well and the stock price goes up, the employee can:

Buy the stock at the lower price
Sell it at the higher price
Keep the difference as profit

Most stock options don’t become available right away. Instead, they follow a vesting schedule, meaning you have to work for a certain period of time before you can use them.

Why Are Stock Options So Complicated in Divorce?

Unlike cash or real estate, stock options come with a lot of uncertainty:

Some haven’t vested yet
The company’s value may change
The employee may need to stay employed to receive them
Taxes can vary depending on how and when they’re used

All of that makes dividing them more complicated than most assets.

How Do Minnesota Courts Divide Stock Options?

Courts in Minnesota generally use one of three approaches, depending on the situation.

1. Wait and See (Deferred Division)

This is often the most practical approach.

Instead of guessing the value now, the court waits until the options vest or are exercised. When that happens:

The employee spouse receives the options
The other spouse gets their share at that time

This works well when the value is uncertain.

2. Immediate Offset

In some cases, the court will try to put a value on the stock options now.

The spouse who doesn’t have the options might receive:

More equity in the home
A larger share of retirement accounts
Other assets of equal value

This allows both parties to move on without staying financially tied together.

3. The Time-Rule Formula

Minnesota courts often rely on a formula from Bangs v. Bangs .

This approach looks at:

How long the employee worked at the company during the marriage
Compared to the total time it takes for the options to vest

The court then divides only the portion earned during the marriage.

What About Taxes?

Taxes are a big deal with stock options.

Depending on the type—whether they are ISOs or NSOs—you could be dealing with:

Ordinary income taxes
Capital gains taxes
Or a combination of both

If taxes aren’t handled correctly in the divorce, one spouse could end up with an unexpected bill later.

The Bottom Line

Stock options can be one of the most complex assets to divide in a divorce. They’re not just about what they’re worth today—they’re about what they might be worth in the future.

That’s why it’s important to:

Properly classify them as marital or non-marital
Use the right method to divide them
Consider the tax consequences

Talk to a Minnesota Divorce Attorney

If stock options are part of your divorce, getting the right advice early can make a significant difference.

Maury D. Beaulier is an experienced Minnesota family law attorney who can help you understand your options and work toward a fair outcome under Minnesota law.