Here is an example of how one couple drafted their stock award in their decree of divorce involving substantial assets:
Special provisions Regarding Award of Restricted Stock Awards
Benefits and Liabilities Awarded to JOHN SMITH
The total sum of 1000 shares of the rights and interests in and to the community shares and one hundred (100%) percent of the separate property shares of the restricted stock awards and restricted stock units granted to USA LLC (the “Company”) as specified on Exhibit “A” of the Agreement Incident of Divorce, subject to all of the terms, conditions and restrictions of the Company’s Plans, as they may have been or may hereafter be amended by the Company as well as other restrictions that may be imposed by the Company, such as those designated in the Company’s insider trading policy.
JOHN SMITH is appointed constructive trustee of the portion of the Restricted Stock Awards and Restricted Stock Units awarded to JANE DOE. JANE DOE’s rights in and to her portion of the Restricted Stock Awards and Restricted Stock Units awarded to JANE DOE herein, and all benefits appurtenant thereto, shall inure to the benefit of JANE DOE’s heirs, executors and assigns. Similarly, JOHN SMITH’s obligations as set forth herein shall be binding on JOHN SMITH and on JOHN SMITH’s heirs, executors, administrators and assigns. Upon the death of JOHN SMITH, any portion of the Restricted Stock Awards and Restricted Stock Units awarded to JANE SMITH herein which may become payable after JOHN SMITH’s death, shall be payable to JANE DOE’s heirs, executors, administrators or assigns pursuant to the same terms of Section 2.7 of the Agreement Incident of Divorce and Section 10.0 in this Decree of Divorce as were applicable prior to the death of JOHN SMITH including a payment obligation upon an immediate lapse of the restriction on sale of such interest upon the death of JOHN SMITH(if applicable).
In the event that JOHN SMITH is terminated for cause and USA LLC requires the repayment of monies paid for the purchase of stock identified in Exhibit “A” (including the shares awarded to JANE DOE described below) JOHN SMITH shall be liable based on the percentage of stock awarded to him in Exhibit “A”. As an example the 4/30/2018 grant that vests on 4/30/2022 was a total of 400 shares and JOHN SMITH was awarded 300 shares and JANE DOE was awarded 124 shares and therefor JOHN SMITH liability for repayment of any monies paid for the purchase of stock identified in Exhibit “A” is 300/400 or 75%.
Benefits and Liabilities Awarded to JANE DOE
326 shares of the rights and interest in the community shares of Restricted Stock Awards and Restricted Stock Units granted to JOHN SMITH by USA LLC (the “Company”), as specified in Exhibit “A” of the Agreement Incident of Divorce, subject to all of the terms, conditions and restrictions of the Company’s Incentive Plan, as they may be or may hereafter be amended by the Company.
The parties acknowledge that the Company currently does not provide for the assignment and transfer of the Restricted Stock Awards and Restricted Stock Units awarded to JANE DOE herein from JAMES A. HUTCHINSON to JANE DOE. The parties recognize that the Plan will deliver all of the cash or securities distributed from the Plan to JOHN SMITH, and JOHN SMITH shall promptly sell the securities representing JANE DOE’s interest received by the Plan to the Company and distribute to JANE DOE an amount equal to the gross amount received from the sale of such securities pursuant to Section 2.7 of the Agreement Incident of Divorce and Section 10.0 in this Decree of Divorce. BRITTANY NICOLE HUTCHINSON’s rights in and to the interest in the Restricted Stock Awards and Restricted Stock Unit awarded herein, and any benefits appurtenant thereto (including all appreciation on or dividends paid with respect to such Restricted Stock Awards), shall inure to the benefit of JANE DOE’s heirs, executors and assigns. Similarly, JOHN SMITH’s obligations as set forth herein shall be binding on JOHN SMITH and on JOHN SMITH’s heirs, executors, administrators and assigns.
JOHN SMITH shall hold in trust for JANE DOE’s sole and exclusive benefit any proceeds or stock certificates distributed by the Plan which represents JANE DOE’s interest in the Restricted Stock Awards and Restricted Stock Units. Within five (5) days of all or any part of JANE DOE’s interest in the Restricted Stock Awards and Restricted Stock Units being released from the restriction not allowing JOHN SMITH from selling all or any part of such interests, JOHN SMITH shall (i) sell to the Company such interests, and (ii) deliver to JANE DOE, in immediately available funds, an amount equal to (a) the proceeds received from the sale of such interests (for the avoidance of doubt, such amount shall not reduced by any U.S. federal income tax withholding or withholding of FICA/OASDI taxes) plus (b) any cash received other than from the sale of such property (such as from a dividend paid with respect to the interests).
JANE DOE shall be responsible for reporting on her personal
U.S. federal income tax return for any year of receipt of proceeds (i) any capital gains recognized on the sale by JOHN SMITH of all or part of her interest in the Restricted Stock Awards and Restricted Stock Units, and (ii) any dividends accumulated on such interests and included in the calculation of the amount distributed to JANE DOE with respect to such interests. JOHN SMITH shall promptly cooperate with JANE DOE in providing the information necessary to report such sale including the original tax basis for the property and the purchase proceeds.
Any conflict as to Section _____of the Agreement Incident of Divorce and Section 10.0 in this Decree of Divorce, including but not limited to the calculation of any taxes due and their allocation by and between the parties shall be resolved by binding arbitration with ________________.
In the event that JOHN SMITH is terminated for cause and USA LLC. requires the repayment of monies paid for the purchase of stock identified in Exhibit “A” JANE DOE shall be liable based on the percentage of stock awarded to her in Exhibit “A”.