In a literal sense, of course a spouse’s advanced degree or professional license almost always enhances the wealth and lifestyle of their family. But how is that value fairly accounted for in divorce?
The Connecticut Supreme Court has held that educational degrees are not marital property subject to equitable division, but rather enhancements to future income potential that can potentially be considered a source for alimony. Or likely future income enhancement because of qualifications tied to a degree or license could provide evidence that the degree holder may not need spousal support.
That advanced degrees and professional licenses are not property for purposes of dividing assets in divorce is also the settled view in the vast majority of states. 2 Equitable Distribution of Property, 4th, section 6.61.
Anatomy of an educational degree
The nature of a medical, legal, accounting, pharmacy, architectural, engineering, dental, master’s or doctoral degree is difficult to classify as property and to quantify as it has quirky characteristics. A professional degree belongs solely and intrinsically to the person who earned it, ceases to have any impact when its holder dies and cannot be sold, gifted, inherited or used as collateral. Placing a dollar value on a degree would be difficult and inexact – no method exists to divide it between the litigants like they could a bank account.
Behind a degree is the effort and time of its holder. But for younger married couples, it is common for the nonstudent spouse to manage the household, contribute financially to expenses or care for children during that time. The stay-at-home spouse may forego their own educational and professional development while supporting their spouse in attaining their degree (and subsequent licenses), knowing the household will almost surely have a higher standard of living as a result.
But nothing is for certain. The degree holder may unexpectedly become ill or disabled and unable to use their education for higher income. Or they may change careers or decide they do not want to practice the profession enabled by the degree. And then not only is the degree difficult to characterize as a kind of property, but also it fails as a future income enhancer.
Making it fair for the nonstudent spouse
It is not surprising that courts lean toward somehow compensating the sacrificing litigant, especially when the couple is young and starting to build their marital estate. The stay-at-home spouse may not have expected to continue the lifestyle they lived during their partner’s educational endeavors, but they rightly had good reason to think the marital lifestyle would be enhanced by a higher level of income because of the spouse’s degree. So, a judge may feel it would be equitable to see that the sacrificing spouse is well provided for in the divorce decree given these reasonable expectations.
The court may be differently inclined if the professional degree or license holder has been earning income in their field for years already before the divorce or if the other spouse obtains a degree or license later in life when the size of the marital estate is already significant.
Using a professional degree or license to enhance the holder’s future income potential and award future alimony has some risk. The award could become modifiable if there are significant changed circumstances or end upon remarriage, death or cohabitation with another adult.
An attorney can analyze the situation and may recommend advocating instead for a lump sum alimony award at the time of divorce or an adjustment to the property distribution to account for the unsettled nature of future professional success.
Connecticut Supreme Court in Simmons v. Simmons
The 1998 opinion in Simmons is the leading case in our state on this issue. Each spouse earned degrees during the marriage. The wife became a registered nurse and the husband finished medical school and began a five-year surgery residency, during which he filed for divorce. They had each paid their own school costs and worked to support the family until the medical school did not allow the husband to work.
He obtained loans and grants, while she continued to work and “provided financial and emotional support as well as her services as a homemaker.” The wife did not pay the husband’s educational expenses directly.
The wife argued that his medical degree should be classified as property subject to equitable distribution under the appropriate state statute. CT Gen. Stat. 46b-81. This law does not define “property” and our courts have cast an expansive and wide net in that regard, wider than the courts of many other states have.
However, the Supreme Court agreed with the trial court that the husband’s medical degree exceeded the limits of the definition and was not property to be divided. The court was guided by legislative intention, “overwhelming weight of authority” in other states and public policy.
Presently existing property interest or mere expectancy?
The court explained that the question is whether an asset is a “presently existing property interest” or a “mere expectancy.” An existing property interest is property for purposes of equitable distribution in divorce, but a mere expectancy is not.
A vested pension benefit, for example, is distributable property as a “presently existing, enforceable contract right.” Even though there might be uncertainty whether the person will live long enough to collect the benefit – and it is an intangible asset – it is still a present right to be paid in the future. The “defining characteristic of property for purposes of [equitable distribution] is the present existence of the right and the ability to enforce that right.”
Quoting Krafick v. Krafick, 234 Conn. 783 (1995), the Simmons court agreed that the “defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence.” It also described aspects of “nonproperty” expectancies as similar to an “anticipated inheritance” that may never happen and only a possible “future beneficence.”
The husband’s medical degree was not a “presently existing, enforceable right to receive any particular income in the future … [but] nothing more than an opportunity for the degree holder, through his or her own efforts, in the absence of any contingency that might limit or frustrate those efforts, to earn income in the future.” An advanced degree has “no inherent value extrinsic to the recipient.”
The trial court took the degree into account when it divided the marital property but did not distribute the “value of the medical degree because it is not property.” However, the Supreme Court disagreed with the lower court’s failure to award alimony to the supportive wife. Looking at other states’ courts, our Supreme Court agreed that alimony is an appropriate way to “compensate the working spouse,” although not every divorce of this nature must automatically award alimony. It depends on weighing all the relevant factors.
Alimony is modifiable in the future under a substantial change in circumstances, giving the parties flexibility to respond to unforeseen economic conditions, for better or worse.