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Employment benefits can have an impact on divorce

| Feb 1, 2021 | Divorce |

Particularly among executives and upper management, many Houston residents may receive a variety of benefits from their employers above and beyond a cash salary.

For instance, like many other Texans, they may receive health insurance or tax-incentivized retirement plans like a pension or 401(k). Both of these types of benefits can impact the outcome of a court’s property division or child support award.

However, there are other benefits that, while less common, may play into the outcome of a divorce.

Stock options may be community property that is subject to division

For example, some employees may be allowed to purchase stock options.

The basic idea of a stock option is that an employee can be given the right to purchase the company’s stock at a set price after a certain number of years. Stock options are valuable when the price of a company’s stock increases over time.

To illustrate, a person who has the option to buy 1,000 shares a stock at $100 a share can make $100,000 if she exercises the option to buy when the market price is $200.

Like other forms of non-cash compensation, putting a value on stock options is a difficult process, especially since the value depends heavily on market conditions that can change over time.

Moreover, there may be disputes about whether all the value of stock options should be community property. There are also practical questions about how to actually divvy up the value.

Employment benefits may also affect child support

Employees in the Houston area who receive special perks, like mandatory bonuses, housing or car allowances, and the like may get included as income when the court calculates child support.

A person with questions about whether and to what extent their employment benefits will affect child support should speak to his attorney.