In a recent ruling, the Jerusalem Rabbinical High Court decided that stock options granted to a husband in a high-tech company must be shared with his ex-wife. This decision reversed an earlier ruling by the regional rabbinical court, which had concluded that the wife had no rights to the options.
The regional court had argued that the options, which were not part of the joint account, should be excluded from the division of assets, treating them as a gift to the husband. However, the Rabbinical High Court ruled, by majority opinion, that the wife was indeed entitled to a portion of the stock options, as they were part of the couple’s joint assets.
In many high-tech companies, especially startups, employees are granted stock options as an incentive. These options allow employees to purchase company shares at a predetermined price. The value of the options fluctuates with the company's success, and the shares can be sold once the options vest, typically after a specified period.
The couple, who have several children, separated in 2020. The regional court had argued that stock options are considered a gift to the employee and, therefore, should not be included in asset division. The wife disagreed, insisting that the options were part of the husband’s salary and should be included in the division.
On the other hand, the husband claimed that the couple had lived separately for years, with no marital intimacy, and had essentially shared a "parental economic unit." He argued that the options and stock he accumulated during his employment were based on his personal skills and were earned before the marriage, meaning they should not be divided. Even if they should be, he contended, the unusual nature of their relationship meant there was no need for equal distribution.
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The Rabbinical High Court determined that the wife was entitled to a portion of the stock options accumulated before the couple’s separation. If the vesting period occurred after the separation, she would be entitled to a share proportional to the time before their split.
The court further clarified that stock options are not equivalent to a gift between spouses and that issues regarding marital intimacy do not affect the equitable division of assets.
The case was decided by Rabbis Shlomo Shapira, Tzion Luz-Iluz (in dissent), and Tzvi Ben Yaakov. The wife’s legal representation included rabbinic advocates Tzvi Geller and Nadav Teichman.
Attorney Daniel Friedenberg of the Hoffmann & Friedenberg law firm, specializing in inheritance and family law, explained, "The Rabbinical High Court reversed the regional court’s decision based on the principle of equality, asserting that both spouses are entitled to share in the assets accumulated during their marriage. This ruling was based not only on legal principles but also on thorough consultations with external experts on stock options."
Attorney Dr. Sharon Friling, who represented the husband, said, "The ruling highlights the complexity of dividing stock options and the timing of asset valuation, which can vary depending on when the couple’s financial relationship ended. The court’s differing views on these issues reflect the need for further exploration in this complex area of law."