New York Divorce Law...

New York Law - Professional Degrees

Professional degrees are marital property in New York.

There are several different approaches to valuing the degree.

The basic idea is to calculate the average enhancement in earning capacity of people who have the degree as opposed to people who have the pre-marital level of training or education.

The stereotype case is here is the case of the wife who puts the husband through medical school or law school, where the divorce happens right after that. In that case, the wife will typically get 50% of the value of the degree.

Where the wife did not provide support, or she has her own career, the value she gets may decline to around 30%.

For awhile it was the case that, once the person gets a practice going, the court valued the practice instead and did not value the license to practice. However, now the court will value the license to practice regardless of the number of years in practice the party may have.

The way to figure the value of the professional license is:

• Figure the spouse's projected future earnings. For recent graduates, use averages. For experienced individuals, use the actual professional earning potential.
• Subtract, for each year, what the spouse's earnings would be with just a college degree.
• Discount the result to present value. (This is a calculation that asks, essentially, what amount of money one would need available to invest today to produce those cash flows in the future.)
• Multiply the result of this by the marital property fraction. For example, if the couple were married for three out of four post-graduate years, the marital fraction would be 3/4.

Somehow, the parties must be careful not to double-count the income, that is: once as value of license, then a second time as value of the practice.

Cases:

McSparron (1993) 597 NYS2d 743, (1994) 619 NYS2d 163, and (1995) 639 NYS2d 265 (The wife became a doctor during the marriage and then she and her husband were divorced. The trial court said her license was worth $903,406, following the standard analysis of what doctors earn. But the wife said that she personally was going to work at an HMO, so she would earn less. The appeals court said the court should have considered what this spouse's life expectancy of earnings was, not what a general doctor's life expectancy of earnings in that particular practice area was. The court ordered that the husband's license to practice law be evaluated as well, even though the husband had already been working for several years, and even though he had recently lost his job in the Attorney General's office.)

Morrongiello v. Paulsen (1993) 601 NYS2d 121 (wife awarded 30%, where she provided half of joint income during law school and her career moved along steadily).

Parlow (1989) 548 NYS2d 373 (value business or practice once it is established).

Mcalpine (1989) 539 NYS2d 680 (wife got nothing from husband's "Society of Actuaries" membership, where it was earned in course of husband's regular business and husband performed most household duties).

Savasta (1989) 549 NYS2d 544 (compare earning capacity of degree-holders versus capacity before degree).

O'Brien (1985) 498 NYS2d 743 (A professional license, to the extent acquired during marriage, is a marital asset. The court valued the license by comparing the average earnings with a college graduate to the average earnings of a person engaged in the licensed profession over the course of an entire career).

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