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DivorceProperty DivisionEquitable Distribution in New York: Enhanced Earning Capacity of Law Degree Limited to 10%

April 16, 2012

18121-iStock_000012393400XSmallIn New York, if, during the marriage, one spouse earns a degree or obtains a professional license, the enhanced earning capacity is a marital asset which may be distributed as part of the divorce.   So, how much is a professional degree worth in terms of equitable distribution?

If you are not the person who earned the degree or obtained the license, one appellate court answered, not that much.  In Esposito-Shea v. Shea, the wife earned a law degree during the marriage and was only obligated to pay her husband 10% of her resulting enhanced earning capacity.

An enhanced earning capacity is the difference between the earning capacity of the party before and after earning the degree or attaining the license.

According to the court’s decision:

[A] nontitled spouse seeking a portion of the enhanced earning potential attributable to a professional license or degree of a titled spouse is required to establish that a substantial contribution was made to the acquisition of the degree or license . . .[w]here only modest contributions are made by the nontitled spouse toward the other spouse’s attainment of a degree or professional license, and the attainment 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 distributed amount of that enhanced earning capacity.

The husband in Esposito-Shea v. Shea maintained that he was entitled to a large portion of  the wife’s law degree because he was the family’s primary wage earner during the parties’ marriage and arranged his work schedule so that he could care for their children while the wife attended law school. However, said the court:

these sacrifices represented “‘overall contributions to the marriage rather than an additional effort to support [the wife] in obtaining [her] license.”  In addition, the wife’s own efforts in obtaining her law degree cannot be minimized. For example, she worked in part-time positions throughout the marriage and was employed during the summer months while attending law school. She earned merit scholarships and paid a significant part of her law school tuition with an inheritance she received during the marriage. Under the circumstances, it cannot be said that Supreme Court abused its discretion in limiting the husband’s distributive share of the wife’s law degree to 10% of its overall value.

The trend, as highlighted by this decision, is for courts to award the lion’s share of degrees and licenses to the person who has the “ability tenacity, perseverance, and hard work to actually earn the degree, not their spouse.

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