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Handling executive compensation in Texas divorce

On Behalf of | Mar 2, 2023 | Family Law |

Texas company executives often receive stock options and restricted stocks as part of their yearly compensation for a job well done. This can represent significant money if the company’s stock rises or performs well. However, divorce proceedings can complicate matters for married people with executive compensation tied up in company stocks.

Texas divorce laws

In Texas, all properties that a couple acquires or income that they earn during their marriage are subject to division in a divorce. This includes any stocks or stock options held by either spouse, regardless of whether it was part of an executive compensation package. The court will divide these assets equitably and fairly according to the circumstances of the case.

Challenges that come with dividing executive compensation

Dividing executive compensation is often complicated because it may be subject to certain restrictions, such as vesting over a period of time, limitations on how many shares an individual can sell at once and potential tax consequences. There’s also a matter of timing: some options may not be worth much during the divorce but could become extremely valuable. This makes it difficult to assign a fair value to each asset and divide them accordingly.

Dealing with executive compensation

It is important for people who are going through a high-asset divorce and have executive compensation packages at stake to strategize how best to divide these assets. For example, a couple may agree to accept a smaller amount of money now in exchange for the right to receive more later. It is also possible to set up trusts and other arrangements that will help protect your interests and ensure that you receive a fair share of the assets.

Divorce proceedings can be quite complex for those with executive compensation tied up in stocks or stock options. It is important for couples to understand the laws surrounding these assets and strategize how to divide them equitably during the divorce. Texas marital laws help spouses get their fair share of marital property regardless of the circumstances.