The idea of applying community property rules to personal resources makes many people anxious. Most people (understandably) have a limited understanding of how community property laws function and may believe myths that make them averse to filing for divorce. Yet, contrary to popular misconceptions, community property statutes in Texas do not force people to split all of their resources in half when they divorce. The courts may start with a presumption that a 50/50 split should be fair, but a judge can enter any property division decree that they believe is just given the circumstances facing the family.
Unusual assets can easily lead to divorce complications in Texas family court. For example, if someone is a successful professional with a robust compensation package, they may have employee stock options included in their work contract. How can employee stock options potentially affect the property division process?
Stock can be difficult to divide
Stock options, especially those extended to workers as a reward for performance or loyalty, can be difficult to value. Especially if a business has not yet begun offering public stock, it can be difficult to determine what stock options are worth for the purposes of property division in a Texas divorce. Additionally, it is common for companies to impose restrictions on employee stock options to prevent workers from immediately liquidating the stock that they acquire. It may not be possible to sell or liquidate the stock, meaning that spouses have to consider its value when making other key decisions about the divorce process.
Unpaid benefits can be a challenge as well
Employee stock options are often only available after workers achieve certain goals. Whether they need to hit certain metrics regarding their job performance or they need to remain at the company for a set number of years, they may have theoretically accumulated the right to purchase stock that they do not yet own. It can be very difficult for spouses to agree on how to address high-value holdings that aren’t yet technically in the possession of either spouse. However, there is likely little question that someone has accrued or at least become eligible for a certain portion of their employee stock options during the marriage.
Those preparing for divorces with complex resources like stock options in play may need assistance as they negotiate with the spouse or begin setting expectations. Setting realistic goals during Texas divorce proceedings can help people advocate for a fair outcome regardless of how complex their holdings may be.