For many families on the Eastside and in Seattle, restricted stock units from Microsoft, Amazon, or another large technology employer are among the most valuable — and least understood — assets in the marriage. Grants are made years before they vest, new "refresher" grants arrive regularly, and the value moves with the share price.
This guide covers the practical questions that come up when those RSUs have to be divided in a Washington divorce. It is general information, not legal or tax advice; every grant agreement is different, and your attorney and tax adviser should review any settlement. For the broader picture, see dividing equity compensation in divorce.
Start with the grant documents, not the account balance
The brokerage or equity portal shows what has vested and what is scheduled. What matters in a divorce is each grant individually: its grant date, the vesting schedule, and what the grant was for — a new-hire award, an annual refresher, a promotion grant, or a retention award. Download the grant agreements and a vesting schedule for every outstanding award before mediation begins.
Vesting patterns differ by employer — and by grant
- Many large tech employers grant new-hire awards that vest over several years, followed by annual refresher grants with their own schedules.
- Some schedules are back-loaded. Amazon, for example, has historically used a schedule in which most of a new-hire grant vests in the later years. A back-loaded grant can make the "unvested" portion at separation much larger than it first appears.
- Others vest in equal installments. When a couple holds grants from more than one employer, or several refreshers, it is worth building a single table showing every tranche and its vest date.
Because schedules change over time and vary by grant, rely on the documents for each award rather than on general descriptions of a company's practices.
Which portion is community property?
Washington generally looks at what an award was granted for. Shares that vested during the marriage are typically community property. For unvested grants, Washington courts have used time-based ("time rule") allocations to separate the portion earned during the marriage from the portion earned after separation, and the analysis can differ for a new-hire grant, a refresher, and a retention award. Each grant should be analyzed on its own terms with your attorney.
Practical ways to divide tech RSUs
- Offset: the employee keeps all the RSUs, and the other spouse receives other assets — home equity, cash, retirement funds — of equivalent after-tax value.
- Deferred sharing: the employee holds the community share of each tranche and delivers shares or after-tax proceeds as it vests. This shares the stock-price risk fairly but requires a clear schedule and ongoing cooperation.
- Hybrid: divide the vested shares now and share future tranches under an agreed formula.
The agreement should list every grant and tranche, the allocation formula, how withholding is accounted for, what happens if the employee leaves the company or is laid off, and how vesting information will be shared.
Taxes: what is different in Washington
RSUs are generally taxed as ordinary income to the employee when they vest, and employers usually withhold shares to cover federal tax. Washington has no state income tax on wages, so RSU vesting income is not taxed by the state while you live here — but that can change if either spouse moves to a state that does tax wages before future tranches vest. Washington's capital gains tax may apply to larger long-term gains when shares are later sold. A tax adviser should confirm how these rules apply to your settlement.
Why it matters who understands the plan
Joti Basi spent more than twenty years in the software industry and holds an MBA from the University of Washington, so vesting schedules, refreshers, and bonus-driven pay are familiar ground. That helps both spouses work from the same, accurate picture. See also divorce mediation for executives and professionals and working with a divorce financial neutral.
This page is general information, not legal, tax, or financial advice. Crossroads Neutral, LLC is not a law firm. Laws change and every situation is different — please consult a licensed attorney about your rights and obligations.
