For executives, technology employees, physicians, and business owners across Central Texas, annual compensation may come in many forms beyond a traditional paycheck. If you are getting a divorce, you may be wondering, “How are RSUs and deferred compensation divided in a Texas divorce?” An attorney at The Law Office of Ben Carrasco, PLLC, can provide detailed answers. These benefits can be divided based on several factors, including when the benefit was earned and how community property laws apply.
Professionals residing in Westlake Hills, Bee Cave, Lakeway, Round Rock, Georgetown, and other high-income Texas communities have commonly benefited from these types of compensation arrangements.
Choose the Law Office of Ben Carrasco, PLLC
At The Law Office of Ben Carrasco, PLLC, we handle family law cases throughout Central Texas. Our firm has experience with high-asset divorce cases and complex property division issues. Ben Carrasco guides clients through deferred compensation division cases, business interests, retirement benefits, stock options, RSUs, and more.
Ben was educated at Stanford and is board-certified in family law. We can help with your contested family law case in Travis County, Williamson County, Hays County, and the surrounding areas of Texas.
RSUs and Deferred Compensation
Restricted Stock Units, or RSUs, and deferred compensation plans are increasingly common forms of compensation. These can account for a significant portion of highly compensated individuals’ total earnings. In high-net-worth divorce cases, RSUs and deferred compensation can become complex assets that are frequently contested.
RSUs are a type of stock-based compensation granted to an employee by an employer. RSUs grant company stock to an employee upon vesting. Like stock options, RSUs typically incentivize an employee to continue working for an employer for a predetermined amount of time.
Deferred compensation plans are another way employers pay employees. These plans allow employees to defer receiving a portion of their income until a future date. Executives and highly compensated individuals commonly participate in deferred compensation plans. A 2025 survey of 306 firms discovered that 70% of eligible executives joined a non-qualified deferred compensation (NQDC) plan, an increase from 61.2% the year before.
When a marriage ends, deferred compensation and RSUs present unique problems. At the time of divorce, it’s possible that the employee spouse has not yet earned the compensation or bonus. It’s also possible that the compensation has been earned but not yet paid to the employee.
Texas RSU Division Laws
Texas is a community property state, which means there are established guidelines for dividing property between divorcing spouses. Texas Family Code § 3.002 creates a presumption that property acquired during a marriage is community property. Texas Family Code § 7.001 states that a court shall divide community property in a just and right manner.
Texas law recognizes RSUs and deferred compensation as forms of property that may be divided in a divorce. When analyzing RSUs and deferred compensation, Texas courts often look at when the benefit was earned.
Many times, compensation can be characterized as both community and separate property. To decide if any of the benefits belong to the marriage, Texas courts must consider:
- The reason why the benefit was awarded
- When the spouse who is the employee performed their job duties
How Judges Divide RSUs During a Divorce
RSUs are unique because they commonly lead to valuation and classification disputes. Employees are typically granted RSUs before the underlying shares actually vest. Therefore, the courts must look at when the RSU was acquired and when it is scheduled to vest, along with the reasoning behind doing so. Reviewing the purpose behind an RSU grant often requires analysis of the employment agreement, stock option plan, grant paperwork, and vesting schedule.
Hire a Property Division Lawyer for Your Case
People looking to hire a property division lawyer should know that RSUs and deferred compensation often require more analysis than other types of marital property. A Texas divorce attorney can review RSU grants and deferred compensation arrangements to explain how these benefits should be divided.
Your attorney may need to:
- Analyze when the compensation was earned.
- Value the benefit.
- Determine community property interests.
They may work with a forensic accountant or valuation professional to analyze complex compensation benefits.
Many divorces in Austin are filed with the Travis County Civil and Family Courts Facility at 1700 Guadalupe Street, Austin, TX 78701. If the parties live in Williamson County or Hays County, then the case may be filed in one of those counties instead.
FAQs
Can RSUs Be Transferred Directly to a Former Spouse After a Divorce?
RSUs cannot necessarily be transferred directly to a former spouse after a divorce. Many employer plans have restrictions on transferring RSUs prior to vesting. Rather than transferring the award itself, many divorce judgments contain language creating a formula for splitting up the proceeds when the shares vest. Plan documents and employer policies may also dictate what is possible.
What Happens If an Employee Leaves the Company Before the RSUs Vest?
What happens if an employee leaves the company before RSUs vest depends on how the employer structures their benefits package. Many employers require that unvested RSUs be forfeited upon termination of employment. The risk of forfeiture can affect the value given to that asset in divorce proceedings, as your continued employment may be required for you to receive those future benefits.
Can a Divorce Settlement Address Future Bonuses Along With Deferred Compensation?
Yes, a divorce settlement can address future bonuses along with deferred compensation. Executives often have outstanding annual bonuses, retention bonuses, or performance incentives that have not been paid. These benefits may or may not be marital property, depending on when they were earned and what conditions need to be met prior to payment. Future compensation may need to be analyzed separately from existing deferred compensation accounts.
What Records Should Employees Keep Regarding RSUs and Deferred Compensation?
Employees may want to keep:
- Grant agreements
- Vesting schedules
- Stock options or other compensation plan documents
- Account statements
- Annual compensation reports
- Tax documents
These documents may prove when, how much, and why you were awarded compensation. Well-maintained documents can also minimize disagreements if there are any questions about who owns what or how an asset should be classified.
Let’s Discuss Your Case
RSUs and deferred compensation plans can be highly valuable in divorce proceedings. Classifying these benefits often requires a careful review of complex documents. The Law Office of Ben Carrasco, PLLC, knows how to handle these types of situations. Contact us today to go over your case.
