Compensation · Ending a marriage No. 03
Executive compensation
Stock options, restricted stock, deferred bonuses, carried interest and retirement plans that vest on someone else's schedule.
(What this involves)
How we approach it
A large part of an executive's wealth may not exist yet on paper. Unvested options, RSUs, performance shares and deferred compensation all have to be identified, split between what was earned during the marriage and what was not, and divided without triggering avoidable taxes or breaking plan rules.
We read the plan documents and grant agreements, not just the summary on a benefits portal, and we work with tax advisers so that the split on paper matches what each of you will actually receive.
This may apply if
- You or your spouse hold unvested stock options, RSUs or performance shares
- There is a deferred compensation plan, or a large bonus timed near the divorce
- Carried interest or partnership units in an investment fund
- Retirement plans that will need a qualified domestic relations order (QDRO)
- A job change, a sale of the company or an IPO is on the horizon
Questions we answer early
- 01 How much of an unvested grant belongs to the community?
- 02 Should grants be divided as they vest, or offset now?
- 03 Who pays the tax when shares vest or are sold?
- 04 How is a bonus earned partly during the marriage treated?
- 05 What does the plan allow, and what does it forbid?
Illustration · a grant that vests over four years
How the work runs § 2
Four steps, in order.
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01
Collect
Grant agreements, plan documents, vesting schedules, pay stubs and equity statements.
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02
Apportion
Each grant split between community and separate under the rule that applies to it.
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03
Structure
Divide now, divide as it vests, or offset with other assets, compared side by side.
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04
Paper it
Orders and settlement terms written so the plan administrator can actually carry them out.
The law, in general terms
Texas, in general terms
Texas has specific rules for stock options and restricted stock. In general, they split a grant between community and separate property using a time-based fraction tied to the grant date, the marriage and the vesting dates.
Rules differ by state
Other states use different formulas, and some leave the method to the judge. If grants were made while you lived in another state, we check whether that changes anything.
General information, not legal advice. Your facts, and the law that applies to them, are what the consultation is for.
Example costs § 3
What it can cost, in examples.
Ranges from recent matters, not quotes. Outside experts bill separately. After the consultation you receive a written estimate for your case.
All fees and retainersOften asked
Can unvested stock be divided at all?
Usually yes, though often not by transferring the shares. Many plans forbid transfers, so settlements commonly divide the value as each tranche vests, or offset it with other assets now.
What is a QDRO?
A qualified domestic relations order is a court order that tells a retirement plan how to pay a share to a former spouse. Without one, the plan generally cannot pay the other spouse, even if the decree says it should.
Talk to us about executive compensation
Names first for the conflict check, then a 90-minute strategy consultation with the attorney who leads this work. No details through the form, please.
Or call the office
(214) 555-0163We never leave a detailed voicemail unless you tell us it is safe.