How it works

Vested Shares counts only tranches that actually vested during the marriage. Each tranche is all-or-nothing — if the vest date falls between the marriage date and the date of separation, 100% of that tranche's shares are community property. Otherwise, 0%.

On the chart, this appears as a step function: flat between vest events, jumping up by the tranche's share count at each vest date. There is no smoothing, no proration. The community's allocation at any given DOS is just the sum of in-marriage vests up to that date.

Formula

When it matters

Because Vested Shares is all-or-nothing per tranche, it mostly agrees with time-rule methods — a tranche that vested squarely within the marriage is community property under any approach. The difference shows up when the DOS falls close to, but just before, a vest event. Time-rule methods would give partial credit for the nearly-vested tranche; Vested Shares gives zero. The longer the gap between vest dates (e.g., annual vs. monthly vesting), the larger this cliff can be.

The argument for this method: community property should only reflect assets the community actually acquired. Until a share vests, it's a contingent future right, not property.

Courts have generally moved away from this view. In In re Marriage of Nelson (California, 1986), the court recognized that unvested stock options represent deferred compensation for services already rendered — and that the long time basis of equity grants magnifies the risk of forfeiture compared to ordinary compensation like salary. The time-rule approach was adopted specifically to prevent that forfeiture risk from unfairly shifting the community's earned share to the employee's separate property.

That said, those rulings addressed grants with a single vesting event — often years out. Modern stock grants are typically subdivided into monthly or quarterly tranches, which means each individual tranche's forfeiture window is much shorter. With frequent vesting, the risk profile starts to resemble ordinary salary more than the large, all-or-nothing option grants the court was concerned about. Whether that distinction warrants a different apportionment approach is a common point of contention, and it remains an active area of argument in divorce proceedings involving equity compensation.