79R1841 JMM-F

By:  Goodman                                                      H.B. No. 410



A BILL TO BE ENTITLED

AN ACT

relating to the property interests of spouses in connection with 
certain separate and community property.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter A, Chapter 3, Family Code, is amended 
by adding Sections 3.007 and 3.008 to read as follows:
	Sec. 3.007.  SEPARATE PROPERTY INTEREST IN CERTAIN EMPLOYEE 
BENEFITS.  (a)  A spouse who is a participant in a defined benefit 
retirement plan has a separate property interest in the monthly 
accrued benefit the spouse had a right to receive on normal 
retirement age, as defined by the plan, as of the date of marriage, 
regardless of whether the benefit had vested.
	(b)  The separate property interest of a spouse in a defined 
contribution retirement plan may be traced using the tracing and 
characterization principles that apply to a nonretirement asset.
	(c)  A spouse who is a participant in an employer-provided 
stock option plan or an employer-provided restricted stock plan has 
a separate property interest in the options or restricted stock 
granted to the spouse under the plan as follows:
		(1)  if the option or stock was granted to the spouse 
before marriage but vested all or in part during the marriage, the 
spouse's separate property interest is equal to the fraction of the 
option or restricted stock in which the numerator is the period from 
the date the option or stock was granted until the date of marriage 
and the denominator is the period from the date the option or stock 
was granted until the date of vesting;  and
		(2)  if the option or stock was granted to the spouse 
during the marriage but vested after the date of dissolution of the 
marriage, the spouse's separate property interest is equal to the 
fraction of the option or restricted stock in which the numerator is 
the period from the date of dissolution of the marriage until the 
date of vesting and the denominator is the period from the date the 
option or stock was granted until the date of vesting.
	(d)  The computation described by Subsection (c) applies to 
each component of the benefit.
	(e)  A spouse's separate property interest in an option or 
restricted stock described by Subsection (c) must be recalculated 
if, after the initial division of the option or stock, the vesting 
occurs on a date earlier than the vesting date stated in the 
original grant of the option or stock.  The recalculation required 
by this subsection must adjust for the shortened vesting period and 
applies to options and stock granted before and during the 
marriage.
	Sec. 3.008.  PROPERTY INTEREST IN CERTAIN INSURANCE 
PROCEEDS.  (a)  Insurance proceeds paid or payable to a spouse that 
arise from a casualty loss to property are characterized in the same 
manner as the property to which the claim is attributable.
	(b)  Insurance proceeds paid or payable to a spouse in the 
form of disability insurance coverage shall be characterized in the 
same manner as the income the loss of which gave rise to the 
insurance claim.  Payments from disability insurance, including 
workers' compensation, paid or payable to a spouse during the 
marriage for loss of earning capacity is community property 
regardless of the date on which the disability occurred.  Payments 
from disability insurance, including workers' compensation, paid 
or payable to a spouse after the date of dissolution of the marriage 
for loss of earning capacity is that spouse's separate property 
regardless of the date on which the disability occurred.
	SECTION 2.  The changes in law made by this Act apply to a 
suit for dissolution of a marriage pending before a trial court on 
or filed on or after the effective date of this Act.
	SECTION 3.  This Act takes effect September 1, 2005.