In New York, the capacity for enhanced earnings is a marital asset based on the premise that all property acquired during the marriage is marital property. Professional licenses acquired during the marriage are marital property pursuant to DRL 236 (B)(1)(c) subject to equitable distribution because it is a valuable asset reflected in the enhanced earning capacity it affords to the holder. Courts have awarded a percentage of a license obtained during the marriage to the non-titled spouse when the non-titled spouse has made contributions towards the titled spouse’s attainment of said license. These enhanced earnings are valued as of the date of commencement of a matrimonial action.
That said, there are some limitations on this rule. The non-titled spouse bears the burden of establishing that a substantial contribution was made to the acquisition of the title holder’s degree or license. Thus, enhanced earnings as marital property can be further expanded to mean that it is only marital property when there is some economic and/or non-economic contribution from the non-titled spouse.
For example, in McSparron v. McSparron, 87 N.Y.2d 275 (1995), the wife’s medical license obtained during the marriage was deemed marital property where the husband was primary provider of economic support to family while wife was in school, and prepared family meals and tended to children’s needs while the wife focused on her studies.
As another example, the wife in Kim v. Schiller, 112 A.D.3d 671 (2nd Dept., 2013) was entitled to a share of the husband’s enhanced earnings where she made non-economic contributions to the his attainment of his medical license by working full-time throughout the marriage, contributing her earnings to the family, bearing two children for whom she had primary caretaking responsibility, cooking the family’s meals, and participating in the housekeeping.
On the other hand, when the contributions of the non-titled spouse to the titled spouse’s attained of the license and enhanced earning capacity was “de minimus”, the husband was not awarded any share of the enhanced earnings of his wife who obtained her medical license during the marriage (as in Sotnik v. Zavilyansky,101 A.D.3d 1102 (2nd Dept., 2012)).
Likewise, when the acquisition of the degree or license was in large part attributable to the titled spouse’s own efforts (such as obtaining scholarships, working part-time, and using separate property to pay for attainment of the degree or license) will also limit the non-titled spouse’s share in the license. For example, as was the case in Sadaghiani v. Ghayoori, 183 A.D.3d 1309 (3rd Dept., 2011) where the court reduced the share to 10% for the non-titled spouse where the attainment of the degree was more directly the result of the titled spouse’s own hard work.
Once that court decides that enhanced earnings will be considered marital property, the court needs to value the enhanced earnings because the courts recognize that the license itself has some value. Let’s look at an example:
In calculating husband’s enhanced earning capacity as a plastic surgeon, the court in Procario v. Procario, 164 Misc.2d 79 (Westchester Cnty. Supreme Court 1994), compared the earnings for a doctor working as a plastic surgeon compared to working as a general surgeon from the beginning of the action until retirement. Specifically in that case, the husband obtained his license to practice surgery during the marriage. He had 17 months left in his studies when he married. In calculating the value of the enhanced earnings, the husband’s actual earnings as a general surgeon were compared to the earnings of a general practitioner from the time of commencement of the action until age 64. Because the enhancement of earnings attributable to the marriage was only 17 months, the court prorated the valuation to 35% being marital property and thus subject to equitable distribution.
Comments 1
Might want to update this.