Is A Professional Degree Property In a New Jersey Divorce?
As a New Jersey Divorce Attorney, I am all too aware of the famous expression, “what’s yours is mine, and what’s mine is yours.” Well, with some exceptions, this is not accurate in a New Jersey divorce. The most popular question by far that I am asked routinely as a New Jersey divorce lawyer is “how much of my assets will my ex get upon a divorce?” While in New Jersey the theory of equitable distribution is followed, it does not mean that every bit of tangible or intangible property is subject to equitable distribution. Pursuant to New Jersey law, only marital property is subject to equitable distribution.
Marital property is often defined as property acquired during the marriage. While that is a clear-cut definition, the real issue becomes figuring out what property is in the first place. Picture this situation: You have just finished college and have been accepted to law school. That means another three years of hitting the books and studying like crazy. Before starting school though, you get married. Then graduation day finally comes and you successfully earn your Juris Doctor degree. But on top of that, your spouse wants a divorce. Oh, and wants to sue you for half of the value of your law degree.
While that might seem crazy to most people, it can happen. Take our neighboring state New York for example. Pursuant to a case decided in 1985 by the Court of Appeals of New York, a professional degree is considered property. Furthermore, such a degree is considered marital property if it was earned during the marriage. Luckily for folks in New Jersey, this is not the case.
In 1982, theSupreme Court of New Jersey was faced with the same issue in the case of Mahoney v. Mahoney, 91 N.J. 488 (1982). Throughout the time frame that the parties were married, they shared all household expenses. However, for a two year period this was not the case as Mr. Mahoney went back to school for his MBA at Wharton. During that period, Mrs. Mahoney was the sole contributor to the household expenses, totaling approximately $24,000. Id at 493. A year after Mr. Mahoney received his degree, the parties sought a divorce.
While there were not many contested issues in the divorce proceeding, the most noteworthy contention was that Mrs. Mahoney should be reimbursed for the amount of support she gave her husband while he obtained his MBA degree. Id. Although the New Jersey courts have typically held than an “expansive” interpretation is to be given to the word property, the MBA degree did not fall under that interpretation.
The Court held that an “educational degree, such as an MBA, is simply not encompassed even by the broad views of the concept of property.” Id at 496. The Court stated that “the value of a professional degree for purposes of property distribution is nothing more than the possibility of enhanced earnings that the particular academic credential will provide. A professional’s earning capacity, even where its development has been aided and enhanced by the other spouse should not be recognized as a separate, particular item of property…” Id at 497. Moreover, the Court held that “equitable distribution of a professional degree would require distribution of earning capacity income that the degree holder might never even acquire.” Id.
If you are a professional and facing the possibility of a divorce, please contact my office so we may discuss this situation in detail. Thank you.