How to fairly split ESOP

[SpecialGuest]

My spouse and I are getting divorced and they are working for an ESOP. in there plan the own shares and they have a yearly evaluation. What are my best options for splitting the asset. 

[ESOP Guy]

How it is split is up to you and your spouse to decide.  it is just one asset out of many to look at and decide how you two want to divide them up.   Once that decision is made you need to get a valid QDRO written.  I would STRONGLY advise you get the help of an attorney who knows ESOPs.  If they don't have a lot of experience with ESOPs I would strong advise people talk to the people who know the ESOP at the company.  ESOPs are very different from 401(k)s.  It is harder to be clear on how to compute the split since the stock tends to be only valued once a year, unless the stock is traded on a market.   Also, there can be restrictions on how fast one can be paid from an ESOP. 

I have been in the position of having more then one Alternate Payee crying or yelling at me they need the money now to buy a house or some other huge need as I tell them it could take months to years to be fully paid from an ESOP.  

So I would recommend by starting by gathering information from the company about how they need the process to go to get the QDRO approved by them and idea of what the payment process will look like. 

Like I said however how you split the balance is subject to the negotiation between you and your spouse.  QDROs are very technical and have to be written just right.  The company that sponsors the plan has a lot of say in if it is valid or not.  I can't say enough an attorney helping  and talking to the company and their plan advisors helps a lot. 

[david rigby]

Also, take note that you don't have to split it.  That is, following advice above, your attorney will help determine how to value the ESOP (and every other asset), which can then be used in "horse-trading". 

Do not assume each asset must be split, rather focus on splitting the total.  Because there can be an administrative cost to each split, part of the negotiation can consider how to minimize those admin costs.