Characterizing Mixed Retirement & Equity Grants
When an employee spouse participates in a defined benefit pension plan, 401(k), or receives restricted stock units (RSUs) spanning both premarital and marital periods, the assets possess mixed characterization.
The Taggart & Berry Defined Benefit Formulas
Texas courts apply two definitive apportionment models:
- Taggart v. Taggart (552 S.W.2d 422): Applied when an employee retires during marriage:
Community Share = (Months Employed During Marriage / Total Months Employed) * Pension Value - Berry v. Berry (647 S.W.2d 945): Applied when employment continues post-marriage, valuing the pension at the date of divorce/death to prevent the community from improperly claiming post-marital pay increases.
Stock Options & RSU Tracing (Tex. Fam. Code § 3.007)
Under Texas Family Code § 3.007, equity awards granted during marriage for premarital services, or granted before marriage vesting during marriage, are apportioned based on the fraction of the vesting period elapsed during marriage.