The Definitive Guide To Option Vesting In Prenups

For startup founders and tech professionals, equity compensation like stock options and Restricted Stock Units (RSUs) represents significant future wealth. However, these assets introduce unique complexities into prenuptial agreements due to vesting schedules. A well-crafted prenup is essential to protect these future earnings and provide financial clarity for both partners.

What Are Stock Options And RSUs In A Prenup

Equity compensation isn't like a simple savings account. Stock options grant the right to buy company shares at a set price, while RSUs are promises of actual shares delivered after meeting specific conditions. Because they are tied to employment and their value fluctuates, they require special attention. Vesting schedules determine when you gain full ownership, making it unclear what portion is marital versus separate property without a prenup.

Does A Prenup Cover Unvested Stock Options And RSUs

Yes, a prenup can and should cover unvested equity. However, standard prenup templates often overlook these complex assets. To be effective, your agreement must explicitly define how unvested stock options and RSUs will be handled. Customization is crucial to ensure there is no ambiguity about ownership, whether the options were granted before or during the marriage.

Are Stock Options Considered Marital Property

Typically, assets acquired during a marriage are considered marital or community property. Stock options granted or vested during the marriage often fall into this category by default. A prenuptial agreement allows you to override these state laws, clearly classifying your equity as separate property and protecting your hard-earned future assets from division.

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Key Steps To Address Vesting Schedules

Properly addressing vesting is critical. Your prenup should document all vesting schedules, including time-based cliffs and performance-based triggers. Create clear, actionable formulas that define how equity is divided if it vests during the marriage or even after a potential divorce. Planning for "if/then" scenarios, such as a company acquisition or IPO, ensures you are prepared for any outcome.

Moving Forward With Confidence In Your Prenup

Option vesting requires clear definitions and careful planning to protect both partners’ financial futures. Full transparency about all equity compensation is the foundation of a fair and enforceable agreement. Navigating these complexities calls for professional guidance from experts who understand the nuances of equity.

Neptune connects couples with vetted family lawyers who specialize in complex compensation, ensuring your prenup properly addresses option vesting and facilitates meaningful financial conversations. Start your collaborative prenup with Neptune today.