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Could divorce divide a spouse’s retirement plan or stock options?

On Behalf of | Jun 17, 2022 | Property Division |

Chapter 3 of the Texas Family Code notes that the portion of a spouse’s employer-provided retirement plan or stock options earned before marriage classify as separate property. The separate portion of a retirement plan, for example, includes financial contributions made by a single individual or an employer into a 401(k) before your marriage.

After your marriage, however, the income a spouse contributes to a 401(k) is classified as community property, as described on the Texas.gov website. You and your soon-to-be ex-spouse may both have a right to receive half. As noted by SmartAsset, the court may divide the value of a 401(k) generated from the contributions of a couple’s jointly owned property.

How may a court divide an employer’s bonus such as stock options?

Some employers offer stock options as bonuses but place restrictions on when employees may buy or sell them. The portion of a spouse’s restricted stock bonuses earned or purchased while married, however, may be divided during a divorce.

If a spouse cannot exercise stock options until a future date, the court may calculate their fair market value from the date of your marriage until the date of your divorce. This amount may be divided in half as part of your community property division under the Texas Family Code.

What may I do about a spouse’s restricted stock units?

Forbes reports that many start-ups and publicly traded companies offer executives restricted stock units as compensation for performance incentives. During a divorce, you may ask to review your spouse’s earnings to learn about bonuses.

Without an agreement confirming benefits belong to one spouse as separate property, the court may add their value to your marital estate. If a spouse cannot exercise stock options, you may request a “buy out” by trading their value for other assets.

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