Albuquerque Complex and High-Asset Divorce Attorneys

Unlike qualified plans, non-qualified plans are not governed by federal laws like ERISA, which means they do not require a qualified domestic relations order (QDRO) for division. This lack of federal oversight means the terms of these plans are highly individualized, determined solely by the agreement between the employer and the employee. This individuality introduces several potential complications. First, the plan documents themselves often dictate whether and how the benefits can be transferred or divided in a divorce. Some non-qualified plans may explicitly bar asset transfers of any kind or impose severe penalties for early payouts, which can drastically impact the value a non-employee spouse might receive. Second, the valuation of these plans can be incredibly complex. They might represent future, unfunded promises from an employer, rather than a tangible account balance, making it difficult to determine their present value for equitable division in a community property state like New Mexico. Finally, the tax implications of dividing non-qualified plans are often less straightforward and can differ significantly from those of qualified plans, potentially triggering immediate tax liabilities for one or both spouses if not handled with meticulous care.

Stock options grant an employee the right to purchase company stock at a predetermined price within a specific timeframe. The complications arise because these options often have a vesting schedule, meaning they cannot be exercised until certain conditions are met. In New Mexico, if stock options were granted during the marriage, even if they vest after separation or divorce, they are typically considered community property subject to division, at least in part. The challenge lies in determining the marital portion of unvested options, often requiring complex formulas to prorate the portion attributable to efforts during the marriage versus efforts required post-divorce. Valuing unvested options is also speculative, as their future worth depends on the company's performance and market conditions.

RSUs represent a promise from an employer to grant an employee shares of company stock (or the cash equivalent) upon the fulfillment of specific conditions, usually a vesting schedule based on time or performance. Like stock options, the primary complication with RSUs in divorce stems from their vesting schedules. While RSUs granted and fully vested during the marriage are generally straightforward community property, unvested RSUs granted during the marriage but vesting after the divorce present a valuation and division challenge. Courts in New Mexico tend to classify a portion of these as community property, often using a coverture fraction to determine what percentage was earned during the marriage. Valuation also presents issues, particularly for private company RSUs, which lack a readily ascertainable market price. Additionally, the tax treatment of RSUs must be carefully considered during property division to avoid unintended financial burdens on either spouse

A "golden parachute" is a provision in an executive's employment contract that guarantees substantial severance benefits (like large cash payouts, accelerated stock options, or continued perks) if their employment is terminated following a change in company ownership or control. The complication in a New Mexico divorce arises because, even if the event triggering the payout (such as a merger or acquisition) has not yet occurred, the right to receive that potential future payment may have been earned, in part or in whole, during the marriage, making it a community property asset subject to division. Valuing such a contingent asset is highly speculative, as it depends on uncertain future events and market conditions.

Unlike a standard salary, these compensation structures frequently involve a mix of components, such as deferred compensation, performance-based incentives, and various non-qualified plans. The complexity lies in accurately identifying all elements of the compensation package, correctly valuing those elements, and determining what portion constitutes community property (earned during the marriage) versus separate property (earned before or after the marriage). The highly individualized nature of these plans, often governed by company-specific rules rather than broad federal regulations, means there's no "one size fits all" approach to their division.

The value of rare assets is often subjective and can fluctuate greatly, making an accurate appraisal both crucial and challenging. Establishing fair market value for items such as fine art, antique furniture, rare coins, classic cars, or specialized memorabilia frequently requires the expertise of multiple independent, certified appraisers.

The primary complication arises from determining whether the assets held within a trust are considered community property (which are subject to division) or separate property (which are not subject to division). This depends heavily on the type of trust (revocable versus irrevocable), when it was created (before or during the marriage), how it was funded (with separate or community funds), and the specific terms of the trust agreement itself. For example, assets in a revocable trust created during the marriage and funded with community property are typically still considered community property. However, assets in an irrevocable trust established by a third party for one spouse's benefit (such as an inheritance) are generally separate property, but questions can arise if community efforts or funds enhanced their value. Tracing the origin of funds, interpreting complex trust language, and determining beneficial interests often require careful legal and financial analysis.