Recent Blogs


FAM 30A Blog – Money – Stock Ownership Plans, Deferred Payment Plans

Divorce Attorneys In Austin Explain How Equities And Retirement Accounts Are Evaluated In Divorce

In this article, divorce attorneys in Austin examine how deferred retirement accounts, stock options and the like are treated in the division of the marital estate.

Where Stocks Fit In
Stock options, stock ownership plans and other forms of compensation offered by employers cannot be kept separate from the rest of the assets that must be included in the valuation of the marital estate. This can be a rather difficult process depending on how much stock is involved and how it is traded.

The ESOP, Or Employee Stock Ownership Plan
Some employers prefer to offer their employees shares in the ownership of the company instead of participating in employee benefit or IRA plans. When employers offer stock options that are openly traded, setting a value becomes fairly easy because these stocks are valued at whatever the stock prices are in the market. Closely held stocks are not as easy to evaluate because unless the company routinely conducts a valuation of their stocks it may be rather more difficult for you and your divorce attorneys in Austin to determine exactly what they are worth. If the company does conduct such reviews, however, they are usually done on a yearly basis. This makes the stock option far more easy to evaluate as part of the marital estate.

Valuation Of ESOPs
The greater number of shares the employee owns in an ESOP, the greater the degree of ownership that employee possess in the company. The valuation of the stock as shown in the benefits statement can be assessed accordingly. If the employee possesses only a minor share of the stock, perhaps not quite 5%, then the benefit statement is a reliable assessment of the value. However, an employee who has more than 50% is approaching or may already have controlling interest in the company. At that point, you and your divorce attorneys in Austin should seek the advice of a financial expert in order to accurately value the stock. The same applies to the task of assigning value to a deferred compensation plan. These can be extremely complicated and the assistance of a specialist will be valuable when assessing their value during divorce proceedings.

Valuing Stock Option Offerings
A stock option represents the opportunity to buy or sell company shares at a particular price at a given time. Whether or not exercising of the option is advisable depends upon whether or not the company price is advantageous compared to the price of the stock in the open market. An offer of $75 per share for company stock from the employer when the stock is selling in the market for $90 is clearly a good trade. If you can buy the stock for less money by purchasing it in the market, there is no advantage in exercising a stock option. When assessing the value of stock options as part of a marital estate during divorce proceedings, your Austin divorce lawyer will take market value into account and set the value accordingly.

Case Law Value
Your Austin divorce lawyer must also consider case law when assessing the value of stock options, as well as the time frame involved. Again, the assistance of a financial specialist might be advisable. However, before deciding to engage one, the following factors should be taken into consideration:
• Whether or not the stock options add up to a considerable sum. If not, it may be simpler and less expensive to either take them out of the equation or use an estimated amount when considering them as part of the marital estate.
• Can either of the principals exercise the options? If so, then include them. If not, they are worthless.

We Want To Hear From You
For sound, responsible legal counsel to guide you through your divorce proceedings, call on the Attorneys at Nunis & Associates, your divorce attorneys in Austin, at (512) 236-9696 today.

  • 801 West Avenue
    Suite 200
    Austin, TX 78701

    (512) 236-9696

    (512) 236-9695

  • Licensed to practice in Texas Courts, including all 4 Federal Districts of Texas. Primary practice in Central Texas: including Austin and Travis County, Georgetown and Williamson County, Bastrop and Bastrop County, San Marcos, Dripping Springs and Hays County.