Brian D. Perskin & Associates

What is an Enhanced Earnings Capacity?

Equitable distribution, or the division of assets, is a major component of most New York divorce actions. Assets are disclosed during the discovery process, and each party is required to execute a Statement of Net Worth before distribution can be finalized. Only marital assets are subject to equitable distribution during divorce. An often overlooked asset are professional or advances degrees and certifications.

Why are Advanced Degrees Valuable?

Advanced degrees and professional certificates, such as a PhD, Juris Doctorate, or graduate level diploma, are incredibly valuable. Recipients of these certifications often become specialists in their chosen fields, and are more likely earn a higher salary than their peers without advanced degrees. The potential for higher wages and standard of living is known as the Enhanced Earnings Capacity.

Is an Advanced Degree Marital Property?

Unless the entire degree or certification was earned prior to marriage, then it is usually considered to be marital property. The percentage of potential earned income that a spouse is entitled to during equitable distribution depends on the kind of support they provided the other party while the degree was pursued. Support can be given in a few different ways, and typically includes financial support and household support.

Some spouses elect to help their partner pay tuition while they work towards an advanced degree, while others choose to become the primary (or only) monied spouse. This means that the person who continuing their education depends on their husband or wife to support them financially throughout the duration of their studies. In some instances, tuition and fees will be paid from joint bank accounts.

The pursuit of an advanced degree requires a great deal of time and dedication, which may reduce the amount of time that is spent parenting children or assisting with everyday activities in the home. Because of this, the non-studying spouse will play the role of primary caregiver to any children. While this form of support may not be monetary, it is still essential and perfectly valid.

If either one of these criteria are met, then the advanced degree or certificate is considered to be marital property and is subject to equitable distribution in divorce. That being said, the burden of proving said support falls upon the spouse who did not earn the degree. They must present sufficient evidence to the court that supports their claim to any potential increased earnings their ex-spouse may receive. It is up to a judge to determine how much the claimant is to receive.

Enhanced Earnings Capacity

As stated previously, the Enhanced Earnings Capacity is the amount of money one can theoretically earn as a direct result of an advanced degree or professional certificate. Determining the amount of expected lifetime earnings can be difficult, and includes field specific projections that will vary on a case by case basis. Given the complicated nature of the Enhanced Earnings Capacity, a judge will oftentimes issue an order that requires an expert to evaluate the potential for increased earning over a lifetime.

Trust the Best

The Enhanced Earnings Capacity law is open for interpretation and is filled with grey area. Any divorce involving equitable distribution, especially the division of potential earnings due to advanced education, should not be attempted alone. Such matters require the assistance of an experienced divorce attorney. The family law firm of Brian D. Perskin & Associates, P.C. specializes in complicated divorce matters, with an emphasis on the division of marital assets. Ensure that your case is in the right hands, and schedule your free and confidential consultation today!