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Stock Option Income is Included in Child Support

Divorce and family court judges have long struggled with questions over what income should be considered in determining the appropriate levels of alimony and child support that a spouse is obligated to pay in a divorce proceeding. A Massachusetts Appeals Court clarified one such family law question recently in the case of Hoegen v. Hoegen, in which it ruled that income from restricted stock options that had been awarded to a father must be considered as part of his gross income to determine the amount of child support he was obligated to pay.

The father in this case had argued that his ex-wife had waived all rights to his stock option income in their divorce decree. The Court rejected this argument on the basis of precedents in Massachusetts that precluded any one parent from giving up their children’s rights to another parent’s income. A parent can waive rights to income sources on their own behalf, but that waiver will not operate to preclude children from claiming their own rights to that income.

Child support guidelines in Massachusetts include a list of twenty-seven categories of income that must be considered when a family law court is determining an appropriate level of child support that a parent must pay. Stock option income is not one of those categories, but the guidelines do include a catch-all that encompasses” any other form of income or compensation not specifically itemized”. Massachusetts courts in other cases have determined that this category includes prospective income from instruments like stock options. Thus, in Massachusetts family law, divorce, and child support cases, stock options that are awarded to an employer as part of an overall compensation package will be considered for child support determinations.

The attorneys at the Law Office of Lamb and Lamb PC have represented spouses and family members to protect their personal and business interests in divorce and other proceedings. We understand the intricacies of business value and compensation in those proceedings, including valuations and considerations of stock option income. Please see our website or contact us to schedule a consultation on your family law matters.

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