Valuing an Advanced Degree in Divorce

Treatment of Advanced Degrees Obtained

During a Marriage

Marriage is often described as a partnership. Often, a “fruit tree” is used as a metaphor: the couple plants a fruit tree, nourishes it and cares for it, and then enjoys the fruit the tree produces.

Many times, a couple marries before either or both of them has concluded their education. In today’s world, people often pursue a medical degree, a law degree, a Ph.D., or other “advanced degree.” When a spouse’s advanced degree is ultimately obtained as the result of a “concerted family effort” and the couple divorces, the spouse without the degree is substantially disadvantaged because he or she could not enjoy the “fruit” of the tree that was planted during the marriage.

Courts across the United States have grappled with this issue, especially as divorce became more prevalent, and more and more people obtain advanced degrees.

In Postema v Postema, the parties divorced after the husband had received a law degree. Unlike a vehicle which can be awarded to either party or a retirement account that can be divided in half, a law degree cannot be separated from the person who earned it. In addition, the courts decided not to try and “value” the degree since any value would be totally speculative.

To value a degree, one would have to project what the market for lawyers would be into the future; what a particular spouse might earn as a lawyer; when a spouse would die and what the risk of disability would be. If the degree were valued at $500K and $250K were awarded to the wife, the award would be completely inequitable if the spouse with the degree died the next day. He and his estate would have received nothing of pecuniary value.

Michigan decided the issue in Postema v Postema. In a nutshell, if parties divorce after one of them earned an advanced degree as the result of a concerted family effort, the court will attempt to “restore” to other spouse the value of the sacrifices made and/or force the degreed spouse to help the other spouse obtain meaningful education herself of himself.

This is what the court held:

In our view, any valuation of a nonstudent spouse's equitable claim involving an advanced degree involves a two-step analysis. First, an examination of the sacrifices, efforts, and contributions of the nonstudent spouse toward attainment of the degree. Second, given such sacrifices, efforts, and contributions, a determination of what remedy or means of compensation would most equitably compensate the nonstudent spouse under the facts of the case. Woodworth, supra, 126 Mich.App. p. 263, 337 N.W.2d 332; Watling, supra, 127 Mich.App. p. 627, 339 N.W.2d 505. In this regard, we agree with Woodworth that the length of the marriage after the degree was obtained, the sources and extent of financial support given to the degree holder during the years in school, and the overall division of the parties' marital property are all relevant considerations in valuing a nonstudent spouse's equitable claim involving an advanced degree upon divorce.

Where, for instance, the parties remain married for a substantial period of time after an advanced degree is obtained, fairness suggests that the value of an equitable claim would not be as great, inasmuch as the nonstudent spouse will already have been rewarded, in part, for efforts contributed by virtue of having already shared, in part, in the fruits of the degree. See Watling, supra, p. 627, 339 N.W.2d 505. Similarly, where the extent of support or assistance provided by the nonstudent spouse, financial or otherwise, is not significant, or where such assistance comes primarily from outside sources for which the nonstudent spouse was not responsible or is not liable, fairness and equity would also suggest that the value of an equitable claim would not be as great.

Furthermore, an equitable remedy may be exemplified in different ways. For example, as this Court recognized in Krause, supra, 177 Mich.App. pp. 197-198, 441 N.W.2d 66: “[I]f [the nonstudent spouse] wishes to pursue [an] education or take other similar steps to improve ... employability or income earning potential, it is reasonable and equitable to require the [degree-holding spouse] to assist ... in those endeavors.” Thus, in this type of situation, an award consistent with fairness and equity would be one which requires the degree-earning spouse to provide assistance, in the form of financial support, equivalent to that provided by the nonstudent spouse during the marriage.

Where, however, a nonstudent spouse does not wish to further pursue an education, then perhaps equity would best be served by an award reimbursing the spouse for the amount of financial assistance provided toward attainment of the degree, while also recognizing the other intangible, nonpecuniary sacrifices made and efforts expended.

Ultimately, however, the goal is to arrive at a remedy which, consistent with fairness and equity, will compensate the nonstudent spouse for unrewarded sacrifices, efforts, and contributions toward the degree. Thus, in reviewing such a claim on appeal, the ultimate inquiry is whether the remedy or decision of the trial court was a fair and equitable one under the facts of the case, given the sacrifices, efforts, and contributions of the nonstudent spouse toward the degree.

Some things are easy to “value.” If a man quit a $45K/year job to go to grad school, then the family lost that $45K/year. If on the other hand, the husband never unloaded the dishwasher or cared for the children while in school, a court must assign a value to what the wife contributed.

This sounds difficult, but courts and juries deal with these non-economic “damages” all the time in personal injury actions. As long as there is some reasonable basis on which to assign a dollar value to a service or a loss, a spouse may request almost anything in the nature of “restitution.”

On the other hand, if the parties remain married for many years after the degree was earned, the court will consider that the fruit tree has become old, and the fruit it produces is less. If the couple enjoyed additional earnings over a period of time, then the court may conclude that the one spouse who contributed a concerted effort has been “paid back.”