If you receive restricted stock units (RSUs) through your job, divorce can raise an important question: What happens to stock that has not vested yet? In Texas, the treatment of unvested RSUs can depend on when the award was granted, when the marriage began and ended, when the award vests and whether continued employment is required before the restriction is removed. Unvested employer-provided restricted stock can include a community-property interest under Texas law, depending on the terms of the award and the relevant dates.
When can RSUs be community property?
RSUs often vest over several years. If that period overlaps with your marriage, the court may need to determine the community and separate-property interests in the award. When § 3.007(d) applies, the calculation considers the relevant dates and conditions of the award.
The timing and terms of the RSUs can play an important role. For qualifying restricted stock awards that require continued employment, the calculation may consider the time before marriage, during marriage and after divorce. Texas Family Code § 3.007 provides guidance on calculating qualifying restricted stock awards. .
The grant date and vesting requirements can affect how the court treats the RSUs.
Can unvested RSUs be divided?
An unvested RSU does not automatically remain entirely with the employee. The court can examine the award terms and the timing of the grant, marriage and vesting to determine whether the award includes a community property interest.
For example, an employee might receive a four-year stock award during the marriage and divorce two years into the vesting period. The applicable calculation may depend on the grant date, divorce date, vesting date and whether the employer requires continued employment. The court may review the relevant documents and dates to determine what portion, if any, belongs to the community estate.
What documents matter?
The right records can help establish the history and conditions of the RSUs. Useful documents include:
- RSU grant agreements and award notices
- Vesting schedules
- Employer statements showing vested and unvested shares
- Documents showing the marriage and divorce dates
These records can show when the RSUs began, what conditions apply and when the shares may become available. That information can help clarify the issues that need to be addressed during property division.
How are RSUs handled in a Texas divorce?
Identifying a community property interest does not necessarily mean the spouses will split the RSUs themselves. One spouse might keep the shares while the other receives different marital assets to account for their interest.
If some RSUs will vest after the divorce, the parties may also need to address what happens when those shares become available. Reviewing the grant documents and vesting schedule before finalizing the property division can help prevent important financial details from being overlooked.