Stock options can affect child support order
Posted on Jan 24, 2016
Stock options can affect child support
Q My wife is dragging me back to court. She wants more alimony and child support because I made money by selling stock I got by exercising stock options in my employer’s company.
But in our divorce agreement I agreed she’d get three quarters of the proceeds from the sale of our marital home and I got to keep my stock options.
Can she get a double dip?
FFM, North End
A I presume three things. First, your agreement prevents modification of the division of assets because you agreed that could never be modified.
Second, both alimony and child support were merged into the judgment. That means you could seek modification if your wife got a job or if you got sick or lost your job.
Third, your stock options vested and you got a good
profit when you sold the stock.
Generally, each party gets to keep whatever each got from the marital estate and any increase in the value of those assets. So if, after the divorce, your wife spent $1,000 of her share of marital assets to buy lottery tickets and won $10 million, you couldn’t get a penny of that money. But if she invested the after tax $7 million and earned $200,000 a year, you could seek and probably get a reduction in your child support payments.
The Child Support Guidelines requires that, when making a child support order, the Judge must consider all of the income of both parents. The common law provides that one parent cannot cut off a child’s right to support from the other parent. When you put these two rules together the result is that your ex has a right to ask the court to increase the child support because your income went up when you sold the stock. But if this was a non-recurring event, it is probable there would be no increase. If you’ve got a series of options that will vest over the next several years, then your child support is probably going to go up.
If there is a difference between what the old and new child support order, the new order immediately goes into effect. And the Judge has authority to make – and most judge do make - the new order retroactive to the date of service of summons. So if the order goes up $150 a week and the case took 42 weeks, you’d also have to pay a $6,300 lump sum.
Because you didn’t provide all the facts, you need to call an experienced divorce lawyer to get good advice. The lawyer might get your ex to agree to put the extra child support or the lump sum or both into a 529 Plan which would help pay for childrens’ college educations.