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New York Family Law Reform Says Professional Degrees Are Not an Asset Subject to Equitable Distribution

In a 1985 divorce case, O’Brien v. O’Brien, New York broke new legal ground when the state’s highest court decided that a professional degree or license earned during a marriage was a marital asset subject to equitable distribution. However, in the three decades since, few jurisdictions chose to follow New York’s lead, and the decision received full-throated criticism for the inequitable results it produced. Finally, the state legislature has enacted reforms that include a statutory reversal of the rule from O’Brien. But that does not mean that a professional degree is completely removed from the equitable distribution process.

The new law states, “The Court shall not consider as marital property subject to distribution the value of a spouse’s enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement. However, in arriving at an equitable division of marital property, the court shall consider the direct or indirect contributions to the development during the marriage of the enhanced earning capacity of the other spouse.”

By declaring that a license is separate property, the law avoids some of the problems inherent in placing a value on an asset that cannot be sold at any price, and whose worth depends on the continuing labor of the license holder. However, when determining how much of the marital estate as a whole the other spouse might be entitled to, the court may consider the other spouse’s contributions, such as tuition payments, financial support for the household and supportive services within the home, which allowed the license holder to achieve greater earning power. In other words, the spouse is entitled to a share of the wealth the license produced, but does not hold equity in the license itself. Finally, when deciding on spousal support, the court may again consider a recipient spouse’s contribution to the licensed spouse’s enhanced earnings.

The experienced and skilled family law attorneys at Jakubowski, Robertson, Maffei, Goldsmith & Tartaglia are determined to fight for a truly equitable distribution of assets for our clients. If you are contemplating divorce, contact us to schedule a consultation.

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