How are restricted stock units (RSU) handled in a Texas divorce?

In Texas, Restricted Stock Units (RSUs) acquired during marriage are community property subject to a "just and right" division. RSUs granted during marriage but vesting after divorce are typically split using a formula that accounts for the time worked during the marriage. Unvested RSUs are often held in constructive trust, requiring the employee spouse to transfer shares or proceeds to the other spouse upon vesting or sale.

Can my spouse take my RSUs or stock in a divorce?

An investment account and RSUs, even if in only one spouse's name, is typically community property if the funds were contributed or acquired during the marriage. The divorce decree will order that a portion of these assets be transferred to the other spouse or that an equal value of other community property be awarded to the other spouse to offset the value of the RSUs or stocks.

How is the community estate's interest in RSUs calculated if part of the vesting period occured before or after the marriage?

Section 3.007 of the Texas Family Code provides a specific, objective formula for determining the community estate's interst in certain employment benefits such as RSUs. Check out our RSU calculator on this web site. Generally, the portion that vested prior to marriage and the portion that will best after the marriage are characterized as the separate property of the spouse who was awarded the RSUs. The portion of the vesting period that occured during the marriage will be characterized as community property.

Executive Compensation (Options and RSUs)

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Solving the "Time-Rule" Puzzle for Your Future Equity.

We apply coverture fractions and Black-Scholes valuations to capture the community interest in unvested grants and deferred compensation.

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Why Tom Daley for Executive Compensation (Options and RSUs)?

Vesting Schedule & Time-Rule Analysis

We apply specific Texas Family Code formulas to determine the community interest in unvested equity, ensuring you receive credit for the value earned during the marriage even if it vests years later.

Black-Scholes & Intrinsic Valuation

For stock options, we move beyond simple math to use professional valuation methods like Black-Scholes, which accounts for market volatility and time value to establish a fair present-day price.

RSU Characterization

Restricted Stock Units (RSUs) are often treated differently than options. We specialize in tracing these grants to determine if they were awarded for past performance (community) or future retention (separate).

Deferred Compensation Shielding

Executives often defer bonuses or incentive pay to future years. We utilize forensic accounting to ensure these 'invisible' assets are identified and characterized correctly under community property law.

Tax-Liability Mitigation

Stock exercises trigger major tax events. We structure settlements to ensure the non-employee spouse shares in the tax burden of the award, preventing one party from being hit with the entire IRS bill.