Prenups and Tech Equity: Vesting Across the Wedding, 83(b) Elections, and Who Owns the Upside

TL;DR: Equity, not salary, is often the largest asset for people at AI and tech companies, and courts frequently apportion a grant that vests across the wedding using a time-rule formula. According to the IRS, a Section 83(b) election must be filed within 30 days of grant, and under the One Big Beautiful Bill Act (2025), qualifying small business stock issued after July 4, 2025 can qualify for a 50% gain exclusion after three years. A prenup can define upfront what stays separate.

If you work at an AI or tech company, your equity is probably the most interesting line on your compensation package, and often the one with the widest range of possible outcomes. Salary is predictable. A grant of RSUs or founder stock might be worth very little or life-changing amounts, depending on where the company goes. The Bureau of Labor Statistics tracks equity and other supplemental pay as a real component of total compensation in its National Compensation Survey, and for many people in this industry it is the component that matters most. That single fact changes how a prenup should be written, because a prenup built around a paycheck misses where the value lives.

This post walks through how prenups treat grants that vest over time, especially the common case of a grant that straddles the wedding date. If you want the underlying mechanics of RSUs and options first, our guide to prenups for tech workers covers that ground. Here we focus on characterization: what stays separate, what becomes shared, and what a prenup can define before valuations move.

Why equity changes the prenup conversation

For a lot of tech and AI employees, the largest asset in the marriage is not a house or a savings account. It is a stack of unvested grants that may vest across several years. When a prenup is written around salary and bank balances alone, it can leave the biggest question unanswered: what happens to the equity?

Consider how the numbers can run. Someone at a growth-stage AI company might carry a base salary in the low six figures and an equity grant with a paper value several times that, spread across a four-year vesting schedule. If the company raises at a higher valuation, or files to go public, the value of that unvested grant can move faster than any other asset the couple holds. A prenup that names the checking account and the condo but says nothing about the grant has organized the small stuff and left the large stuff open.

Equity is also different in a way that matters legally. It arrives in pieces. A grant made today might vest over four years, which means part of it could be earned before the wedding and part after. That timing is the whole ballgame for how a court later characterizes it. This is the kind of planning that suits people thinking carefully about the future, and if you want a broader sense of who tends to plan this way, our post on who gets a prenup offers context. It is also worth knowing that prenups have become far more common among younger, higher-earning couples, a shift our prenup statistics roundup tracks in more detail.

None of this is a comment on the strength of your relationship. It is planning that removes ambiguity while both partners can talk it through calmly, before there is any pressure or moving valuation in the picture.

The vesting-across-the-wedding problem

Here is the scenario that trips people up. You receive a grant of RSUs or options a year before your wedding. It vests over four years. By the time you marry, some of that grant has vested, and the rest will vest during the marriage. Is it separate property, because you were granted it before you married? Is it marital, because most of it vests after the wedding? The answer in many states is that it can be both.

Vesting is the point at which equity you were granted becomes fully yours, usually after you meet a time or milestone requirement. Because vesting unfolds over time, a single grant can span your single life and your married life. Courts in many states look at that overlap and treat the portion earned during the marriage as marital or community property, even if it has not vested yet. Unvested equity can still count as marital property, depending on why it was granted and when it vests.

The mechanics of a standard grant make this concrete. Many tech grants carry a one-year cliff followed by monthly or quarterly vesting over the remaining three years. If your wedding lands eighteen months into that schedule, the shares that vested in the first eighteen months and the shares still ahead of you may be treated differently, even though they came from the same grant on the same day. The document you signed with your employer describes one asset. A court dividing property may see two, split at the wedding date.

Whether a grant is characterized as separate or marital can also turn on why it was granted. A grant that rewards past service points backward. A grant meant as a retention incentive points forward. A signing grant tied to work you did before you married reads differently from a refresh grant handed out to keep you at the company for the next several years. A prenup can address these questions in advance rather than leaving them to be argued later, when memories of what a grant was "for" tend to diverge.

How courts split equity that straddles the marriage

When a grant is earned partly before and partly during a marriage, many states apply a time-rule formula, sometimes called a coverture fraction. This is a formula that assigns part of a grant to the marriage by dividing the married time spent earning it by the total earning period. In its basic form, the denominator is the total earning period and the numerator is the married years spent earning the grant.

A simplified example shows the shape of it. Suppose a four-year grant began one year before the wedding and the couple separated at the end of year four. Three of those four earning years fell inside the marriage. A basic time rule would point to roughly three-quarters of that grant as the marital share, with the remaining quarter tied to the pre-marriage year staying separate. Real cases add wrinkles, because states differ on when the earning period starts and stops and on how to treat grants that reward future retention rather than past work, but the proportion is the intuition.

Courts commonly apply this kind of time-rule fraction to allocate a grant to the marital estate based on the share of the vesting period that overlapped the marriage. The family-law method is summarized clearly in CBIZ's 2025 overview, Valuing and Dividing Stock Options in Divorce. The core idea is proportional: the more of the vesting period that fell inside the marriage, the larger the marital share. Some states also draw a line at the date of separation rather than the date of divorce, so vesting that happens after a couple splits but before the paperwork is final can fall outside the marital estate.

California offers a well-known illustration of the underlying principle. In In re Marriage of Brown (1976) 15 Cal.3d 838, the California Supreme Court recognized that unvested contractual rights can be property subject to community and separate allocation. That case is about California, and the specifics vary by state and by the facts of each grant, so treat it as an illustration of the concept rather than a rule for your own situation. For a deeper California walkthrough, including pre-IPO detail, see our post on California prenups and unvested RSUs after an IPO.

The table below shows, in general terms, how grant timing tends to affect characterization. Treatment varies by state, so read the middle column as a starting point, not a verdict.

Because these outcomes vary so much, our overview of how prenuptial agreements vary across America is worth a look if you expect to move or hold equity across state lines. A grant that reads as mostly separate under one state's approach can look more marital under another's, and equity holders in this industry relocate often enough that the question is rarely academic.

Where tax mechanics meet characterization

Tax elections do not decide who owns what in a divorce, but they shape value and timing, which is why they belong in the conversation when equity is involved. Two come up constantly for founders and early employees.

The first is the Section 83(b) election. Founders and employees who hold restricted stock often file one to lock in tax treatment early. A Section 83(b) election must be filed with the IRS within 30 days after the grant or purchase date of the restricted stock, and the IRS does not grant extensions. If you miss the 30-day window, the election is void. You can read the IRS guidance on the Section 83(b) election directly; the deadline is absolute and the election is irrevocable, so founder stock frequently involves one of these filings early in a company's life. Practically, the election tells the IRS to tax the stock at grant, when its value may be close to nothing, rather than at each vesting date as the value climbs. That choice can turn later gains into long-term capital gains, and it means the founder often owns the full block of stock outright, subject to a repurchase right, well before it would otherwise vest. For characterization, the timing of that ownership can matter as much as the timing of vesting.

The second is qualified small business stock, or QSBS, a federal tax benefit under Internal Revenue Code Section 1202 for stock in qualifying startups. Recent changes matter here. Under the One Big Beautiful Bill Act, QSBS issued after July 4, 2025 qualifies for a 50% gain exclusion after three years, 75% after four years, and 100% after five years. The Act also increased the per-issuer gain exclusion cap from $10 million to $15 million, indexed for inflation beginning in 2027. Stock issued before July 4, 2025 keeps the older five-year, $10 million rule. Cornell's Legal Information Institute publishes the statute text at 26 U.S.C. Section 1202 if you want the definitional framework.

Why does this belong in a prenup discussion? Because these elections affect what a grant is worth and when that value is realized. A block of founder stock that qualifies for the full QSBS exclusion after a holding period is worth meaningfully more, after tax, than the same block sold too early to qualify, and that after-tax figure is what a couple is dividing. When value and timing are in play, full disclosure and clear drafting carry more weight. A prenup rests on both partners understanding what is on the table, and equity with tax layers on top is exactly the kind of asset that benefits from being written down plainly, with the elections and holding periods identified rather than assumed.

What a prenup for equity holders can actually define

A prenup cannot guarantee a specific court outcome. Enforceability is decided case by case, based on your state's rules and the facts. What it can do is set a clear framework so both partners know what to expect if circumstances change.

For equity holders, that framework can cover several things. It can confirm that grants vested before the marriage stay separate. It can define how a grant that vests across the wedding is treated, rather than leaving that to a later time-rule argument. It can address appreciation, the increase in value of separate property over time, and describe how future grants not yet made will be characterized, subject to disclosure and state law. And it can build in the disclosure step that equity practically demands, because a court is more likely to respect an agreement where both partners understood what they were agreeing to.

Appreciation deserves a closer look, because it is where equity cases often turn. If your separate stock simply rises in value because the market moved, many states leave that growth separate. If it grew because you spent married years building the company, some states treat part of that growth as marital, on the theory that your effort during the marriage helped create it. A prenup can name which approach the couple intends to follow, so the question of "passive growth versus your work" is settled on paper rather than reconstructed years later. Disclosure supports all of this. Attaching a schedule that lists the grants, their dates, their vesting terms, and any 83(b) or QSBS elections gives the agreement a factual spine and makes it harder to argue later that a partner did not know what they were signing.

For couples where equity sits alongside high W-2 income, our guide for high earners covers the broader planning picture. The throughline is the same: a well-drafted prenup is designed to keep separate property separate and to give both partners the same clear starting point.

Frequently asked questions

Are unvested stock options and RSUs considered marital property?

They can be. Even if a grant has not vested, courts in many states treat the portion earned during the marriage as marital or community property. Unvested equity can still count as marital property, depending on why it was granted and when it vests. A prenup can define how these grants are treated ahead of time.

How do courts divide a grant that vests after the wedding?

Many states apply a time-rule or coverture formula. Unvested options and options granted before marriage are divided by a coverture fraction: in its basic form, the denominator is the total earning period and the numerator is the married years spent earning the options. The larger the married share of that period, the larger the marital portion.

Does founder stock get treated differently from RSUs?

The same characterization questions apply: when it was acquired and why. Founder stock often involves a Section 83(b) election. That election must be filed with the IRS within 30 days after the grant or purchase date of the restricted stock. If you fail to meet the 30-day requirement, the election is void, so founders often handle this early.

What is QSBS and why does it matter here?

QSBS is a federal tax benefit for qualifying startup stock under IRC Section 1202. The One Big Beautiful Bill Act increased the exclusion cap from $10 million to $15 million, with a yearly inflation-based adjustment starting in 2027, for qualifying stock. Because it affects value, it is worth disclosing and addressing in your agreement.

Can a prenup cover equity I have not been granted yet?

It can address future grants and how appreciation is treated, subject to your state's rules and full disclosure. A prenup cannot guarantee a specific outcome, but it can set a clear framework so both partners know what to expect if circumstances change over the course of the marriage.

Do I need a lawyer for a prenup involving equity?

Not necessarily for every path, though complex equity often benefits from review. First offers a Self-Serve package for a do-it-yourself agreement, plus Lawyer Review and Bespoke packages when you want an attorney involved in drafting or reviewing your agreement.

How First fits, and your next step

If your compensation runs through equity, a prenup can put in writing what stays separate and how grants and appreciation are handled, so both partners start marriage with the same clear picture. First was built as a modern alternative to the traditional process. No PDFs, no hourly rates, no back and forth with attorneys unless you want it.

First offers a Self-Serve package for a do-it-yourself agreement, plus Lawyer Review and Bespoke packages when you want an attorney involved. If you are weighing which path fits your situation, our online prenup buyer's guide walks through the options, and you can compare the packages whenever you're ready.

First is not a law firm. The information and tools provided by First on this site are not legal advice and not a substitute for the advice of an attorney.

Equity characterization and division vary by state and by the facts of each grant, and tax rules change with annual IRS updates. Confirm specifics with a CPA or attorney before acting.

Methodology

These figures are drawn from the Internal Revenue Code (Sections 83(b) and 1202) as amended by the One Big Beautiful Bill Act, effective for stock issued after July 4, 2025, and from published family-law apportionment methods (the time-rule or coverture fraction) as summarized by CBIZ (2025) and reflected in state case law. Tax thresholds change with annual IRS updates; the current IRS publication is the source of truth, and readers should confirm specifics with a CPA or attorney.

Sources

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By Liz Federowicz, Esq. Written for educational purposes only.