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Don’t forget deferred compensation when dividing your property

On Behalf of | Nov 26, 2021 | Property Division

Trying to secure a fair outcome in a divorce is rarely easy. One spouse’s misconduct could impact your financial situation through wasteful spending. Spouses with significant resources often need to check for hidden assets as well.

Even if you don’t have to worry about your spouse behaving inappropriately with money, you will very likely still need to look over every detail of the property division process carefully. People can unintentionally make mistakes when disclosing their assets or putting a value on them that will affect the property division process in a divorce.

One of the most common oversights divorcing spouses make is forgetting to discuss as-of-yet unpaid deferred compensation earned by either spouse during the marriage. What might happen to deferred compensation in your high-asset Texas divorce?

Deferred compensation is subject to community property law

If you don’t have a marital agreement with your spouse, then most everything you obtained while married belongs to both of you. Community property laws give both spouses a shared interest in the property they purchase or the income they earn.

The community property status of marital income doesn’t just apply to the paychecks that each of you brings home every week. The same rules apply to other benefits, including deferred compensation, that either spouse earned during the marriage. Although it can be difficult to place a value on stock options that you have not cashed in yet or other forms of deferred compensation, disclosing and valuing them will be an important part of the property division process.

Learning about the laws that will affect your high-asset divorce can help you avoid potentially costly mistakes like overlooking or failing to disclose assets.

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