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When Are Stock Options Considered For Child Support

When Are Stock Options Considered For Child Support

Posted on September 28th, 2012

Generally, if a parent receives stock options as part of their compensation package with their company, then the Court may consider it income available for determining support. IRMO Cheriton, (2001) 92 Cal. App. 4th 269.

The Court’s application of this holding varies significantly based on the circumstances of your case.  Generally, there is a rebuttable presumption that “guideline” child support, as calculated by the Court pursuant to Family Code §4056, is correct.  However, the Court has the ability to deviate from guideline child support and modify support upward when an order is consistent with the best interests of a child or children in a support calculation.  Specifically, Family Code §4053(f) provides that children should share in the standard of living of both parents (i.e. even after they separate) even if the increased child support results in improving the standard of living in the custodial household.

Stock option income is precisely the type of income the Court would consider and may deviate from the guideline amount to ensure the children enjoy a similar standard of living in both parents’ homes.

In the case of In Re Marriage of Kerr, (1999) 77 Cal. App. 4th 87, Father had stock options as part of his compensation package with Qualcomm.  Mother did not any have stock options.  The trial court ordered that Father pay monthly child support plus a percentage of his future option income to Mother for a period of time until their children were no longer minors.  Father appealed.  The Court of Appeals held that Father did owe Mother a percentage of his future option income to ensure both children enjoyed a commensurate lifestyle in both homes.  However, the Court of Appeals also held that such percentage must be capped (or a maximum payment set) so that the payout by Father to Mother did not exceed the children’s needs and both parents standard of living.

In the event you or the other parent in a support case earns stock options as part of their compensation package with their employer, it is imperative you hire a Certified Family Law Specialist to assist you with this very complicated area of law.