19 Jan Dividing Stock Options in a Texas Divorce
When it comes to divorce, the biggest questions surround custody and the dividing of property. The initial property that comes to mind tends to be physical – things like cars, homes, furniture, and other possessions. But other assets, such as stocks, are weighed in during the division of property.
Whether you are an investor or your spouse is, during a divorce, stock options are taken into consideration for division.
There are two types of property to consider in a divorce: communal and separate.
Separate property is property that is owned by only one spouse and not the other. Generally, this means that the property was owned by one spouse prior to the marriage or property was inherited by the spouse during the marriage.
Communal property, known in some states as marital property, is property owned by both spouses. It is generally acquired during the marriage. When it comes to divorce, communal property can get split in a myriad of ways. The common thought is that it is a 50/50 split, but this is not always the case.
Stock options can fall under either separate or communal property. Their definition is dependent on when the stock options were acquired. If the spouse owned them before coming into the marriage, it is considered separate property and not to be divided.
If the stock options were acquired during that marriage and both spouses’ names are on it, it falls under a communal property. In this case, the couple needs to decide how it will get split. If this becomes an issue, a judge can step in.
Stock options hold a layer of complexity within them. Factors such as why the stock was purchased, the date the stock became fully vested, and the actual purchase date itself are all factors that determine how the stock gets split in the divorce.
For the state of Texas, there is an entire code section devoted to the factors that determine where your stock options fall. Texas Family Code in Section 3.007 outlines:
- the marriage relationship,
- property rights and liabilities,
- marital property rights and liabilities, and
- general rules for separate and community property
Retirement accounts and stock options are two valuable assets that are not tangible but become important throughout a divorce. When it comes to retirement accounts, your soon-to-be ex-spouse may have a claim to some of your 401k or IRA accounts. In figuring out how to divide everything in the divorce, options such as early withdrawal may be beneficial in order to pay out your spouse.
Much like stock options, when your retirement accounts vests hold weight on how it gets divided. How easy it is to divide up these assets depends on the circumstances surrounding the acquirement and your split.
Divorce can be a tough time. Splitting assets can be a massive headache or it can be seamless. Either way, having an attorney help throughout the process is beneficial. They can advocate for what is best for you and your family during this split.
Navarrette Bowen P.C. has a team of experienced divorce and custody attorneys ready to help you navigate everything that comes with a divorce. Our office is located in downtown Denton. A confidential consultation with us is free, and you can come into our office or schedule one online. Contact us today.