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Divorce issues can extend to stock options

Monday, May 21, 2018

Of the myriad assets that can be accrued by a couple during a marriage, one of the most profound may be stock options in a company. Divorce issues almost always include issues of property and asset division, as many Texas residents can attest. This is why it is important for both parties to have as full an understanding as possible regarding the ins and outs of asset division before approaching the negotiation table. 

Generally speaking, transfers of assets between a married couple fall under the "gift" denomination when dealing with asset division. That is to say, a spouse who willingly gave his or her partner stock options as an employee of a company is said to have been giving a gift to that partner. As a result, the options remain the property of the beneficiary in this case. 

However, pursuant to a divorce settlement, a non-qualified stock option is dealt with somewhat differently. In the case of a NQSO, it is actually considered marital property and therefore is beholden to the property settlement laws of the given state. As Texas is an equitable distribution state, this split of property is largely at the whim of the court overseeing the divorce. 

Divorce issues can take many forms, but a vast majority of them seem to deal with the issues of asset and property division. Texas residents are reminded that even property that one does not immediately equate with the term can be divided as part of a divorce. Understanding how and why this happens can provide both spouses with the foreknowledge they need to reach an equitable and mutually-beneficial settlement. 

Source: marketwatch.com, "After divorce, what happens to your employer stock options?", Bill Bischoff, April 21, 2015

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