When is potential income from stock options considered income for child support?

In California we have limited case law dealing with stock, stock options, and equity compensation as a form of income available for support. Typically stock options are payable as a form of bonus support using an Ostler Smith chart.

A recent 2018 case Macilwaine the Court has now given some clarity on the issue of stock options. In Macilwaine the Court held that once there are no legal restrictions on the employee-parents ability to exercise stock options and sell his or her shares, the options MUST be counted as “income” under Family Code 4058. The available compensation is the market price less the strike price.

This means that if you have stock options you must pay child support on the value of the stock the minute it becomes available for exercise (unless there are legal restrictions on selling). As the employee spouse who pays support you are not required to exercise the stock options but you must pay support AS IF you have exercised the options.

Contact Amanda at Amanda@gordonfamilylaw.com to learn more information.