How to Protect Complex Investments During Divorce

Not all marital assets are straightforward to divide in divorce proceedings. Common holdings like bank accounts and real estate have clear values; sophisticated and high-level assets such as deferred compensation plans, restricted stock units (RSUs), and private equity interests often do not. These assets present distinct legal and financial challenges that require careful handling from the outset of any divorce proceedings.

At WARD FAMILY LAW, LLC, our Chicago divorce attorneys regularly assist clients with the division of complex investments. Protecting your financial interests starts with understanding what you own and how each asset type must be addressed to ensure fairness and future financial security.

Deferred Compensation Plans

Nonqualified deferred compensation (NQDC) plans are commonly provided to executives and highly compensated employees. Unlike 401(k)s and other kinds of retirement plans, these arrangements do not qualify for a standard Qualified Domestic Relations Order (QDRO). Instead, an evaluation of the percentage of the plan that is marital (based on when it was earned) and a subsequent structured division often becomes necessary.

Vesting and payment timing matter significantly in these cases. Courts generally cannot force early payment from these plans; the non-employee spouse will receive their allocated distributions only when the employee spouse would have received them under the plan’s rules.

Restricted Stock Units (RSUs)

RSUs are a form of equity compensation that vest over a certain period of time. Once vested, they usually convert to company stock that can be held or sold. Because their future value may be unknown at the time of divorce, dividing them requires a clear agreement on method and timing.

Common division approaches can include:

• “If and when” division: Both parties share distributions as RSUs vest, based on agreed percentages. This approach reflects actual realized value rather than speculation.
• Deferred distribution: One spouse receives a defined portion of RSUs after vesting, subject to a detailed written agreement.
• Buyout: One spouse receives other marital assets of comparable value in exchange for relinquishing their interest in the RSUs. This requires a reliable current valuation.

A comprehensive agreement should also address who bears responsibility for the ordinary income recognized upon vesting.

Private Equity Investments

Private equity interests often present some of the most complex division challenges. These assets are typically not liquid, subject to uncertain future performance and valuation, and often restricted from direct transfer under partnership agreements.

Practical approaches to these assets during division of property in divorce may include:

• Offset method: The spouse holding the interest retains it; the other spouse receives equivalent marital assets of (estimated) comparable value.
• If/when distribution method: Future liquidated equity is distributed according to a predetermined agreement once a sale occurs, eliminating the need for speculative valuation upfront.

Protect What You Have Built

Dividing complex investment assets in a divorce requires early identification and understanding of the property at stake, thorough documentation designating each as marital or non-marital, and experienced legal representation. The attorneys at WARD FAMILY LAW, LLC have the experience to identify, analyze, and advocate for fair treatment of sophisticated financial assets in divorce proceedings. Contact our team today to schedule a consultation and advocate for your share of complex marital assets.