How it works

Based on the time-rule formula from In re Marriage of Nelson (California, 1986). This is the most common way practitioners apply the Nelson formula: each tranche is treated independently and prorated by the marital fraction of its own grant-to-vest window. Shares in a tranche accrue CP from grant date to vest date; the community's share is the portion of that window that falls inside the marriage.

Formula

Effect of Vesting Frequency

When Vest-Level Nelson is applied per-tranche, more frequent vesting means more independent fractions — each with a shorter denominator — that sum to a larger total. The chart below overlays five vest-level curves on the same 480-share grant, varying only the vesting frequency: every 2 years, annual, semi-annual, quarterly, and monthly. The violet line is the original Nelson — a single vesting event at the end of the grant, where the formula is applied exactly once.

All five grants deliver the same total shares over the same period, yet the vest-level curve bows progressively further above the baseline as frequency increases. The original Nelson line stays constant regardless of how the shares are subdivided. The gap between each colored line and the violet baseline shows the difference produced by applying the formula per-tranche rather than once to the whole grant.

Front-Loaded Vesting

When the vesting schedule is front-loaded (more shares vest early), early tranches have both short denominators and large share counts. The result is a CP allocation curve that rises faster than the actual vesting schedule in the early portion of the grant.

The dashed lines show the actual vesting schedules — ratable (red) and front-loaded (orange). The solid lines show the corresponding Vest-Level Nelson curves. Both grants deliver the same 480 shares over the same period, but the front-loaded schedule shifts shares earlier. The per-tranche Nelson application amplifies that shift: the orange solid curve rises even faster than the orange dashed vesting schedule, because early tranches have both short denominators and large share counts.

Early Cliff Vesting

Some grants deliver a large portion of shares at a single cliff event (e.g., 50% at year 1), then distribute the remainder over the following years. This is the most extreme non-ratable pattern — and it shows clearly how the per-tranche application responds to a single large tranche with a short denominator.

On the ratable grant (left), the Vest-Level Nelson curve bows above the vesting schedule by a consistent amount. On the early cliff grant (right), the curve rises sharply to account for the large cliff tranche — 240 shares with a 12-month denominator — then flattens for the remaining smaller tranches. Compare this with the Ratable Vested article's treatment of the same grant, where the curve follows the employer's intended delivery shape instead.

Marriage After the Grant

So far every example has assumed the marriage began before the grant was awarded. When the marriage date falls inside the grant window instead, the community-property portion can only count the overlap between marriage and each tranche's accrual window — which shifts the vest-level curve down. The chart below uses the same 480-share quarterly grant with a marriage date of 2021-06-01, about 17 months into the grant.

The dashed yellow vesting schedule stays anchored to reality — it still shows when shares actually vest — while the shifted blue Vested-Shares curve (shares that actually vest after marriage) and the shifted red Vest-Level Nelson curve (the CP allocation the per-tranche formula produces) both start from zero at the marriage date. The blue line rises faster than the red one and ends higher: more shares actually vest during the marriage than the formula counts as community property. That gap is the employee's benefit — it shows up because the earliest tranches have the shortest denominators (tranche 1 accrues 30 shares over 3 months; tranche 16 accrues 30 shares over 48 months), so the aggregate accrual rate is highest at the start of the grant and all of that high-rate earning stays separate property.

The dashed grey line above is a "flat-proration" reference — total shares delivered at the average rate. The red Vest-Level Nelson curve sits above it early (accruing faster than average) and below it late (slower). For a continuous ratable grant the two cross at t = T / e, roughly 37% of the way through the grant — about 17-18 months into this 4-year example, right around the marriage date used in the chart above. A marriage starting at that crossover is the closest thing to an "optimum" from the employee's perspective: every pre-marriage day was above-average and every post-marriage day is below-average, so the SP window captures the high-rate portion cleanly. Earlier marriages leak some above-average days into CP; later ones dilute the SP window with below-average days.