Equitable Distribution of Advanced Degrees and Professional Licenses
In New York, the value of a spouse’s academic degree or professional license may be subject to equitable distribution in a divorce proceeding. The typical scenario is one in which one spouse works and supports the other spouse while he or she pursues a course of study leading to an advanced degree or professional license. This article examines the procedural and evidentiary requirements to succeed on such a claim.
Step One: Is the Degree or License Marital Property?
First, the degree or license must be marital property. In order to constitute marital property, a degree or license must be attributable to a course of study, at least part of which was undertaken during the marriage. The license or degree will constitute marital property only to the extent that it is attributable to the work done during the marriage.
Second, the spouse seeking a distributive share of a degree or license must demonstrate that he or she made a substantial contribution to the other spouse’s acquisition of the degree or license. A typical example of such contribution is where one spouse works while the other completes his or her course of study. If only modest contributions were made, however, and the attainment of the degree or professional license is more directly the result of the titled spouse's own ability, tenacity, perseverance and hard work, it is appropriate for courts to limit the amount of the award.
Step Two: How Much Is the Degree or License Worth?
If the license is marital property, then the claiming spouse is entitled to an equitable portion of it, not a return of funds advanced. Its value is the enhanced earning capacity it affords the holder. For purposes of distribution, the present value of the degree or license must be established. Valuation generally requires an appraisal and/or expert testimony.
Step Three: How Much of the Value Can I Get?
This is always the big question. The value of the degree or license is distributed under the same general principles as all of the other marital property. The trial court has flexibility and discretion to structure the distributive award equitably, taking into consideration factors such as the claiming spouse's need for immediate payment, the licensed spouse's current ability to pay and the income tax consequences of prolonging the period of payment. The court is also required to consider the factors laid out in Domestic Relations Law § 236. The Section 236 factors related to equitable distribution of marital property are extensive and beyond the scope of this article, but they are the factors the court must consider in all distributive awards in New York.
Once the court has received evidence of the present value of the license and the working spouse's contributions toward its acquisition and considered the remaining factors mandated by the statute (see, Domestic Relations Law § 236), it may then make an appropriate distribution of the marital property including a distributive award for the professional license if such an award is warranted.