By: Goodman (Senate Sponsor - Harris) H.B. No. 410
(In the Senate - Received from the House April 25, 2005;
April 26, 2005, read first time and referred to Committee on
Jurisprudence; May 13, 2005, reported favorably by the following
vote: Yeas 5, Nays 0; May 13, 2005, sent to printer.)
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. 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 community property interest in a defined benefit
plan shall be determined as if the spouse began to participate in
the plan on the date of marriage and ended that participation on the
date of dissolution or termination of the marriage, regardless of
whether the benefit had vested.
(c) 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.
(d) 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 required continued employment during marriage
before the grant could be exercised or the restriction removed, 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 the grant could be exercised or the
restriction removed; and
(2) if the option or stock was granted to the spouse
during the marriage but required continued employment after
marriage before the grant could be exercised or the restriction
removed, 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 or termination of the
marriage until the date the grant could be exercised or the
restriction removed and the denominator is the period from the date
the option or stock was granted until the date the grant could be
exercised or the restriction removed.
(e) The computation described by Subsection (d) applies to
each component of the benefit requiring varying periods of
employment before the grant could be exercised or the restriction
removed.
(f) The characterization of the marital property interest
in an option or restricted stock described by Subsection (d) 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 that arise from a
casualty loss to property during marriage are characterized in the
same manner as the property to which the claim is attributable.
(b) If a person becomes disabled or is injured, any
disability insurance payment or workers' compensation payment is
community property to the extent it is intended to replace earnings
lost while the disabled or injured person is married. To the extent
that any insurance payment or workers' compensation payment is
intended to replace earnings while the disabled or injured person
is not married, the recovery is the separate property of the
disabled or injured spouse.
SECTION 2. The changes in law made by this Act apply:
(1) 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; and
(2) with respect to Section 3.007, Family Code, as
added by this Act, to the estate of a person who dies on or after the
effective date of this Act.
SECTION 3. This Act takes effect September 1, 2005.
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