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Getting a divorce: How stock holdings are divided in a divorce?

  • August 24th, 2020
  • Cheryl McGirr
  • Comments Off on Getting a divorce: How stock holdings are divided in a divorce?

As an investment, stock represents a percentage share in the ownership of a business. When the business does well, the value of the stock will typically increase, and when the company does poorly or under performs, the value of the stock will typically decrease.

There are various options when splitting the stocks or the shares that are community property. First, selling the stocks, and splitting the proceeds seems like the most natural solution, but many people may want to keep long-term investments. Selling shares can also have potential negative tax consequences. Second, splitting the investments, stock holdings can be split to achieve a fair division. For example, one person can take all the stock in one company while the other takes all the stock in another company with similar value. The number of shares in anyone company can also be split equitably.

How are stock options divided in a divorce?

Employers often give their employees the option to buy company stock, called a stock option. There are two basic types of employment-related stock option plans. The first is generally available to all employees as an employee benefit. The second is usually for executives and includes the stock option as a type of compensation. In Texas, stock options acquired during the marriage constitute a contingent interest in property. They are community assets, at least in part, even if they are not vested at the time of divorce.

Valuing stocks and stock options can be quite complicated, to ensure stock options are divided equitably in a divorce, it is important to contact an experienced family law attorney.

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