When a marriage comes to an end, a divorce is a likely destination. Whereas nobody looks forward to a divorce or to the changes that are a part of that process, the steps taken can oftentimes be positive in many regards. If disagreements about money or arguments over subjects related to finances or a driving cause of your divorce, then the stability you may experience regarding divorce may be felt most acutely in your pocketbook and your future chances at financial success.
I have noticed in married couples that married people cannot achieve long-lasting and true success in finances unless both people are on board with the plan. I'm not telling you that you need to follow any certain plan to become financially successful or to have financial peace. Still, the reality is that two people moving in different directions have difficult times achieving any degree of sustained success. When you and your spouse can come together, and decided to plan an act intentionally, success can be achieved.
In your divorce, you and your spouse will be faced with the prospect of dividing up your community estate and settling finances regarding property owned in the marriage and separately owned property. So much of how this will be done depends upon the nature of your marriage, the number of children you have, the types of property and debts you have in play, and a myriad of other circumstances. Since I Mount can guess exactly what your circumstances are, I will not waste any time making assumptions or drawing conclusions based on hypotheticals.
I want to discuss any aspect of property division that is known as noncash compensation. In all of the blog posts I have written on this subject, I do not believe that I have written about noncash compensation and how it relates to Texas divorces. We try to make this blog a resource for people that come to have questions about the world of Texas family law and would like to the point, straightforward answers. While such simple and straightforward answers are not always available, I do my best to provide information as thoroughly as possible. Still, I am always approachable in terms of your ability to access and understand the information provided.
Depending upon how complex your financial life is, you may be the owner of a significant amount of assets and also someone who owes that to several creditors. Adding to this difficulty would be figuring out how to divide up any non-cash compensation. Whether your divorce case is one where you will be representing yourself or is 1 where you will have an attorney, it may seem like the odds are stacked against you as far as your effort to handle all the financial aspects of your current situation successfully.
That is where today's blog post comes in. I want to provide you with as much information in context as I can about this issue so that you can use it as a jumping-off point when speaking with an experienced family law attorney. Bear in mind that the attorneys with the law office of Brian Fagan offer free of charge consultation six days a week in person, over the phone, and via video. We are well versed in working with you to discuss issues like noncash compensation that may be impacting you and your family in your current divorce scenarios.
Just what is noncash compensation?
When it comes to living a post-divorce life, the most frequently accepted kind of support from one ex-spouse to the other would be spousal maintenance or contractual alimony. These are types of post-divorce spousal support that are allowed in the Texas family code. Depending on your circumstances, you may either agree to contractual alimony payments or may be ordered to make spousal maintenance payments depending on whether your case should go before a judge in a trial.
Contractual alimony is a form of spousal support that occurs after a divorce through the process of negotiation. Typically in a mediation setting, your spouse may agree to receive payments from you of an expected amount over a certain length of time. These payments may be made monthly, bimonthly, or on whatever basis you all agree to. A family court judge may be able to enforce your contractual alimony payments in the future but would only be able to do so to the extent that they could have awarded spousal maintenance.
On the other hand, spousal maintenance is ordered by a family court judge after a divorce trial. These maintenance payments are court-ordered and would be limited to 20% of your gross monthly income at the time of your divorce. Depending upon the length of your marriage, these payments could last for up to 10 years. The death of either party to the divorce, your ex-spouse remarrying, or cohabitating with a person with whom they have a dating relationship would be grounds to terminate any orders of special maintenance.
Noncash compensation stands in contrast to either of these types of cash compensation that may be ordered after a divorce. When you divide property in a divorce, we typically think of being part of the Community property estate. Even if we're talking about bank accounts, stocks, and other investments, although you don't have your hands on this money or value currently, you can identify the amounts through bank statements, investment statements other information like this.
Other types of property and assets that are frequently divided in a divorce include vehicles, real property, your marital residence, and other intangible property assets such as vehicles. When we think about issues like noncash compensation, we will be considering dividing up the property that does not have a specific value at the moment. These types of assets are trickier to divide, given that you must be able to keep them organized, evaluate which estate they belong in, and then determine a relative value amount for each asset.
What are some examples of non-cash compensation?
Noncash compensation typically refers to investments and retirement accounts. For example, with a pension, you may be able to ascertain an approximate value, but the pension would produce for you every month at the time of your retirement. Still, you may also be unable to gain a clear understanding of what the pension will be valued at in terms of right now at the top of your divorce.
Types of stock may also be termed as non-cash compensation in your divorce because the value of the stock is not known at this moment. After all, you do not own it. For example, as a benefit through your employer, you may own types of restricted stock or even a stock option where you would be able to purchase stock at a certain price in the future if certain conditions precedent were fulfilled. These stock options have a value, but it is difficult to determine what it is exactly.
As a result, What are the jobs that you, your attorney, and possibly an expert in this field must undertake in your divorces to determine an approximate value to figure out how to divide them in your divorce? You may even be limited from selling or purchasing noncash pieces of property during your divorce due to standing orders or temporary orders that are set up. You need to know what you can and cannot do during the divorce about noncash compensation.
As we have seen, even taking a dollar value for stock or other types of noncash compensation at this moment may not be the best way to value the asset. Depending on how much noncash compensation or assets you own, this could be a substantial part of your community estate and may sway how your case is handled both in a trial or mediation setting. There is little way to accurately predict what the stock market will do over the next 10 to 15 years. There is quite a bit of evidence that the stock market will increase in value over that time, and thus, your stocks may be worth more, but there is no real way of knowing exactly by how much they will increase or decrease, for that matter.
Being able to make assessments like this and then provide clients with assistance in valuing these assets is what an experienced family law attorney can bring to the equation. You need to be able to weigh the pros and cons of dividing up these types of assets in the divorce so that you can receive a fair deal when it comes to a division of your community estate. Without a doubt, noncash compensation can represent a substantial part of your community estate. Still, it can also represent a substantial mistake if you do not correctly handle matters related to this subject.
For that reason, I recommend meeting with a handful of family law attorneys and interviewing them regarding this subject in particular if you anticipate that it will be a big part of your case. You will want to make sure that your family law attorney is experienced in handling divorces but is experienced in helping people in your position divide property like noncash compensation. I like to tell people that there is nothing wrong with an attorney learning the field of family law but that you shouldn't be the person they practice on. Your best bet is to find an attorney who has been there before in his skill of dividing these types of assets. You will not get a second chance after the divorce, so your best bet is to get it right the first time.
High wealth earners should be especially aware of noncash compensation issues in divorce
not every divorce involves issues regarding noncash compensation. Typically, persons who are more high-earning received types of noncash compensation as benefits associated with their employment. We have already covered how stock options and restricted stock are types of compensation that are not necessarily reflected in salary. However, the information may come to the forefront that these types of noncash compensation exist in the discovery process. That is how they become part of the list of items to be negotiated upon in mediation.
For example, noncash compensation such as stock options can be exercised once or twice a year on most occasions. It would help if you looked at your temporary orders with your attorney to determine whether or not the stock options can be exercised or even sold to present a clear picture of your divorce. If you know that you have stock options available for purchase or sale, you should work with your attorney to figure out exactly when those dates arrive and what you can do with them as far as negotiation for your case.
A wise thing for you and your attorney to do is maybe 2 go ahead and request permission from the court to buy or sell shares of stock by these stock options. If you find out that your temporary orders do not allow for the purchase or sale of stock in these scenarios, then you may want to ask a judge for permission to do so under limited circumstances to divide up your community's state. That way, you can determine how much stock is available, and its value and better understand how everything fits into a division of your community estate.
It would be best if you asked an attorney in any consultation with them what their plan may be as far as determining what an attorney thinks about the ability of the stock to go up or down in value based on conditions in the market. I am not implying that your attorney would be able to play stockbroker or guess or time the market in any way. Still, the attorney should have a plan in place depending on what happens with the stock market regarding increases or decreases in value over time. Acting intentionally in this regard is very important, and your attorney should have a plan to help guide you and provide advice where need be.
The other option would be to address this issue upfront with your plan to take advantage of any of these options to purchase her cell during your divorce. If you can get on the same page with your spouse, you would be able to avoid going to court to have a judge address the issue. This will save you both time and money. It will also lay the groundwork for establishing a line of open communication regarding issues like this.
Provide information to your attorney and then listen to their advice
Probably the best information that I can provide on this subject, without knowing your specific circumstances in the types of non-cash compensation that are relevant to your divorce, would be to figure out with your attorney how often your stock options would be able to be exercised and then to figure out how you want to address that issue as a result. Considering that some divorces can take years to complete, you will want to have a plan in place from the outset of your case to avoid situations where vesting dates occur seemingly out of the blue where you and your attorney have no plan on how to deal with them.
I cannot emphasize enough to make sure that you and your attorney were on the same page with this issue. Your attorney will be able to guide you better based on your circumstances, jurisdiction another is she's related to your divorce, but you may violate temporary or standing orders if you allow for these vesting dates to pass without taking certain actions. Regardless of the situation that you find yourself in, you can almost certainly make informed decisions in advance if you put into place proper planning.
Working with an experienced attorney, one who displays a willingness and ability to develop a plan and stick to it, is the best place to start, in my opinion. Rather than rushing into a divorce with no plan and an attorney that you lack confidence in, I would recommend interviewing a handful of attorneys, finding out their ideas on the subject, and determining which one presents the best road map for you and your family.
Questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in this blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultation six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law and the circumstances in your life that may be impacted by a child custody or divorce case.
