Obtaining a professional degree is hard work that requires dedication and sacrifice, not only for the student but also for their spouse. Not to mention, it can also be quite costly and burdensome on the family budget.
The courts realize that some spouses put their loved one through an expensive and time-consuming degree program only to find themselves divorcing years or even decades later. In recognition of this, family courts sometimes determine that a professional degree is intangible property eligible for equitable distribution. In others, courts find that the sacrifices made by spouses who choose to forgo their own careers or support their partners through their education entitles them to reimbursement in the form of maintenance.
If you are going through a divorce and have questions about your spouse’s professional degree or your own and where it falls within marital property, do not hesitate to reach out to a well-versed New Jersey divorce attorney for help.
Divorce Basics
When a couple decides to divorce, there are typically several issues to work out. They can work these issues out through mediation, negotiations, a collaborative divorce, or by following their prenup or postnup. If they cannot work out these issues on their own, their local family court will be forced to make determinations for them. Whatever the court decides, they will be bound to adhere to. The main issues to be worked out are usually:
- The division of assets
- Child support
- Alimony or spousal support
- Child custody
Perhaps you want the china you received at your wedding, and your spouse wants the 4×4 vehicles, or maybe you are wondering if the educational degree you received during the course of your marriage will be considered when dividing your assets. Whatever your questions are regarding your divorce proceedings, a seasoned divorce attorney in New Jersey could help.
Defining Marital Property
Once a couple is married, property that they acquired during their marriage either jointly or separately becomes marital property. Separate property is property brought into the marriage by each individual spouse or property that one spouse receives as a gift or an inheritance during the marriage. If the value of the separate property appreciates during the marriage, that value could be considered marital property even if the appreciation is not from the direct contribution of the other spouse.
New Jersey is a no-fault divorce state which gives the court the power to distribute marital property equally if the couple does not come to a different agreement or they do not have a value prenup or postnup agreement. In this state, all property that is legally gained during the marriage by either spouse separately or jointly, no matter whose name might be on any relevant titles, is at risk for equitable distribution.
Courts will use many different yet couple-specific factors when dividing a couple’s assets equally. Some of these factors include the:
- Duration of the marriage
- Age and health each spouse
- Established standard of living
- Value of homemaking and childcare
- Occupation and income of both spouses
- Needs and contributions of the parties in acquiring the property
- Alimony awarded
Sometimes property division is simple, and other times, such as the case of commingled funds, it can be quite complicated. For example, if property is purchased with funds that are both separate and marital. When this happens, the court will usually look at the source of the payments to the property. The spouse that contributed separate property is entitled to receive a proportionate interest in that property, which will not be at risk of division. The remaining balance of the property is labeled marital property and will be subjected to equitable distribution.
What are Intangible Assets?
Intangible assets are considered in connection with either the division of property in a divorce proceeding or spousal support. The most common intangible assets are:
- professional degrees and licenses
- goodwill of a business
- pension rights
Out of all intangible assets, professional degrees are the ones that, couples cannot agree on whether they should be classified as marital property or not.
Is a Degree Marital Property in a Divorce?
The answer to this question is yes and no, depending upon who you ask. Historically, many courts determine that a degree should not be considered marital property and, therefore, exempt from equitable distribution. The basis for this decision is that future earning capacity does not fit the legal definition of property, and the earnings are from work performed after the legal dissolution of the marriage. Although, sometimes experts are called upon to evaluate the professional degree of one spouse in a divorce to determine its associated earning potential. The other spouse is then awarded their fair share of that amount.
Another inherent problem with treating a degree like property is that property settlements are final, unlike spousal support. Thus, modifications cannot be made to this portion of the divorce settlement if the professional degree does not amount to the value it was predicted to amount to.
To find a happy medium for this issue, some courts opt to reimburse the contributing spouse for their contributions while the other spouse was earning their degree. Since a degree is non-transferrable and does not have an absolute future monetary value, in some cases, a spouse could receive reimbursement in the form of alimony for their financial contributions to the education of the other spouse who obtained the degree.
What about a Professional License?
Most jurisdictions will not recognize a professional license as a marital asset subject to equitable distribution. However, professional goodwill could be considered marital property and its value distributed as such. Professional goodwill is an increase in earning capacity that occurs due to a professional’s reputation and client or customer base.
Hire a Divorce Lawyer to Help with Asset Division in Your Divorce
If you or your spouse hold a professional degree that you think may become an issue in your divorce, you should speak to an experienced divorce lawyer in New Jersey as soon as you can. Call Petrelli Previtera, LLC today at 866-465-5395, chat with a live agent, or schedule your consultation online.