Should a Professional Degree Be Marital Property? It Depends

Photo by Sandy Millar on Unsplash

Sarah Simon, Associate Member, University of Cincinnati Law Review

I. Introduction

In the United States, couples are tying the knot later in life.[1] One reason for delaying marriage is to obtain a college education.[2] Those couples who marry after finishing college may decide to pursue a professional degree during marriage. For spouses who pursue professional degrees while married, a potential problem can arise upon divorce: Is the degree marital property? The answer to this question currently depends on where the couple resides.[3]

This article argues that state courts should adopt a balancing framework for deciding if a professional degree should constitute marital property. Parts II through VI will explain variation across states and look at two cases that illustrate different approaches, then discuss how spousal support factors into dividing marital property. Part V explains the drawbacks of the approaches courts currently use and proposes a framework for state courts to employ. Part VI concludes with the impact of adopting the framework.

II. State Regulation of Marriage and Divorce

States have the authority to regulate marriage and divorce. Previously the federal government attempted to regulate marriage by defining it as “between one man and one woman” under the Federal Defense of Marriage Act (“FDMA”).[4] The Supreme Court struck this law down in 2013 because the Constitution gives states “full power over the subject of marriage and divorce.” [5] As a result, marriage and divorce laws vary from state to state. Since federal courts cannot adjudicate divorce cases, there is no federal precedent that state courts must follow when deciding if a professional degree should be marital property.[6]

III. Differing State Court Approaches

Most state courts do not classify a professional degree as property.[7] In In Re Marriage of Graham, the wife worked full time during her six-year marriage so her husband could obtain a master’s degree in business administration.[8] The parties filed for divorce shortly after the husband completed his education and the trial court found that the husband’s degree was marital property subject to division under the Colorado Uniform Dissolution of Marriage Act.[9] The Act defines marital property as “all property acquired by either spouse subsequent to the marriage” with narrow exceptions.[10] The trial court calculated the future earnings of the MBA at $82,836.[11] The court allocated $33,134 to the wife because the wife had provided “seventy percent of the financial support” which paid for joint expenses and her husband’s degrees.[12]

The court of appeals reversed and found that a professional degree was not property under the Act. The Colorado Supreme Court affirmed the decision because a degree lacked the hallmarks of property.[13]  The court distinguished the degree from property because it is not transferable as it “terminates on the death of the holder,” therefore the degree was “simply an intellectual achievement.”[14] The court emphasized that no other jurisdiction classified a degree as marital property and that the couple had not accumulated any marital property during their marriage.[15] The dissenting judge argued, “equity demands that courts seek extraordinary remedies to prevent extraordinary injustice.”[16]

In New York, along with a few other states, courts consider a professional degree marital property.[17] In Quarty v. Quarty, the wife obtained her nursing degree during the marriage while working, then completed graduate school to become a nurse practitioner.[18] The husband argued he should be awarded part of the wife’s income from her degree because he helped care for their two children and completed other household chores while she obtained her degrees.[19] The husband was required to show that he made a “substantial contribution…to the acquisition of the degree.”[20] In deciding if a “substantial contribution” was made, the court asked if the spouse changed his schedule and/or completed extra household chores so that the other spouse could earn her degree.[21] If the spouse did not take on additional responsibilities while the other spouse earned her degree, the court will restrict “the nontitled spouse’s share of the enhanced earning capacity.”[22] The court found that since the husband took on more childcare responsibilities than he ordinarily would have so the wife could attend school, he was entitled to a share of her income potential.[23] The court awarded him “25% of the value of the wife’s enhanced earning capacity.”[24] The wife appealed the decision and the appellate court affirmed the trial court’s decision for the husband.[25]

IV. State Laws on Spousal Support

Some states, such as Ohio, do not recognize a degree as marital property but factor the degree into awarding spousal support.[26] Every state has some form of a spousal support law, which requires one spouse to pay money to the other spouse for a period of time (if one spouse has a considerably higher income than the other spouse).[27] In Ohio, spousal support laws require courts to look at the “income of the parties” and “the relative earning abilities of the parties” along with several other factors.[28] Ohio courts have full discretion because there is not a set formula for determining spousal support.[29] Family attorneys often say, “spousal support is the least predictable issue in any case.”[30]

V. Discussion

The latitude that courts have in determining if a professional degree is marital property can cause unfair outcomes because courts employ flawed reasoning and nebulous standards. Furthermore, spousal support does not remedy these unfair outcomes. First, in Graham, the court incorrectly stated that a professional degree is not property because, for something to be considered property, it must be transferable and inheritable.[31] However, property law does not require something to be transferable and inheritable to constitute property. If this were true, many things would not qualify as property. For example, courts recognize that life estates constitute property interests even though they cannot be inherited nor transferred because they terminate upon the death of the holder. The Graham court further reasoned that the degree is an “intellectual achievement” which does not constitute property. Again, this assertion is false. Property law recognizes intellectual achievements as property. For example, intellectual property is an intellectual achievement that constitutes property. The court’s incorrect narrow view of property prevented the wife from recovering the income she contributed to the husband’s pursuit of his professional degree and set a harmful precedent for future litigants.

Second, although the Quarty court classified a degree as marital property, the working spouse still must prove that they made a “substantial contribution” in helping the titled spouse earn their degree.[32] How can a spouse prove that they made a “substantial contribution?” This standard can be hard to meet if the couple does not have children that the working spouse helped care for. If one spouse changed their schedule or took on extra household duties, the other spouse could refute this and it could be one spouse’s word against the other’s in court. The court should have given a precise definition of what “substantial” entails. This case set an unclear precedent with the potential to cause unjust results if the working spouse cannot show that they significantly altered their schedule to facilitate the other spouse’s pursuit of a professional degree.  

Third, spousal support laws only offer a forward-looking remedy. They cannot compensate a spouse who worked and contributed a significant amount of their income to support the degree-earning spouse, like the wife in Graham. Spousal support laws also cannot compensate the other spouse if both parties earn the same amount after the titled spouse completes their degree. This is because the parties now have the same earning ability which prevents the spouse who worked while the titled spouse earned their education from being compensated for their sacrifice. The working spouse should be able to recover these costs.

Whether a professional degree is viewed as marital property should not depend on the court’s reasoning in the state that a couple resides in. Instead of strictly classifying a degree as something that can or cannot be divided, state courts should adopt a four-part framework. A flexible framework would allow courts to determine on a case by case basis if a professional degree should be subject to division and solve the two issues that cause unfair outcomes: incorrect reasoning and vague standards. By requiring courts to follow a uniform framework, courts cannot solely rely on their reasoning and can instead follow the prescribed clear standards. Lastly, a flexible framework would lessen the likelihood of unfair outcomes by increasing the chances that the court will classify the degree as marital property so that the working spouse is afforded a remedy that spousal support laws cannot offer.

First, the court should determine if the parties had an agreement that one would provide for the other, so he or she or they could earn their degree. If there is evidence of an equitable agreement, the court should aim to enforce this agreement under contract law principles. However, these agreements should not be judicially enforceable by default; the court must evaluate if the couple’s arrangement was fair. If there is not sufficient evidence of an agreement between the parties or if the arrangement was unjust, the court should go to the next factor.

Second, courts should determine how the degree is being paid for. If the parents of one spouse are paying for the degree, this leans toward the degree not being classified as marital property. Since one spouse’s parents are paying for the education, it is a gift. Courts do not classify gifts as marital property and they cannot be divided between spouses upon divorce.[33] If the spouses are jointly paying for the degree, the degree should be classified as marital property because both spouses have invested in the degree in anticipation of the financial benefits the degree will bring. If the spouse is taking out loans to pay for the degree, this is not determinative of how the degree should be classified and courts should go to the next factor.

Third, courts should assess how much the non-degree-earning spouse is contributing financially to the degree-earning spouse’s pursuit of the degree. In Graham, the wife contributed “seventy percent of the financial support.” The court should have classified the degree as marital property because of her significant contribution. If one spouse is paying for more than fifty percent of the household expenses, while the other is earning their degree, the degree should be classified as marital property. The degree-earning spouse is likely not making as much money as the other spouse and would not be able to pursue their education if the other spouse were not working. Therefore, the court should lean towards classifying the degree as marital property to restore the financial contributions made by the other spouse.

Fourth, the court should consider when in the marriage the degree-earning spouse began their education. If the degree was partially complete when the couple married, the court should consider giving the non-degree-earning spouse partial ownership interest in the degree. If the degree was not started until after the couple was married, the court should lean toward classifying the degree as marital property, depending on the other factors.

This framework would solve the two problems that plague courts: erroneous reasoning and obscure standards by requiring each court to ask the same four questions: (1) did the parties have a prior agreement for how responsibilities should be divided, (2) how is the degree being paid for, (3) what percentage is the working spouse contributing to shared expenses, and (4) when did the titled spouse begin pursuing their degree.

VI. Conclusion

As discussed in the beginning, states have the power to prescribe their marriage and divorce laws. However, this creates varying laws with different and potentially inequitable outcomes, as demonstrated by how state courts view a professional degree upon divorce. Some argue states should be free to regulate marriage and divorce as they see fit with no regard to uniformity. After all, federal courts cannot adjudicate these cases so there are no constitutional precedents states must follow.

Adopting a uniform framework would allow state courts to classify a professional degree as property depending on the couple’s unique circumstances, instead of the arbitrary classification based on where the couple resides. Currently, every state’s approach to dividing a professional degree has pitfalls. Although a uniform framework would not be perfect, it would inarguably increase consistency in divorces across states and allow courts to reach more equitable outcomes by looking closely at each couple’s individual circumstances. States have adopted laws such as the Uniform Commercial Code and the Uniform Probate Code to standardize these practice areas across states. Marriage laws would similarly benefit from uniformity.

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[1] In 1970, nearly 50% of women were under 20 when they first married. In 2009, this number fell drastically to a mere 7%. The median age for women to marry is 27 and 29 for men as of 2018. Statista Rsch. Dep’t, Weddings and Marriage – Statistics & Facts, Statista (Jan. 8, 2018) https://www.statista.com/topics/797/weddings-and-marriage/.

[2] Max Nisen, 5 Reasons Why People Are Getting Married Later And Later In Life, Business Insider (Oct. 28, 2013) https://www.businessinsider.com/why-people-get-married-later-2013-10; Roughly 64% of adults with a college degree are married; D’vera Cohn et al., Barely Half of U.S. Adults Are Married – A Record Low,Pew Research Center (Dec. 14, 2011) https://www.pewsocialtrends.org/2011/12/14/barely-half-of-u-s-adults-are-married-a-record-low/.

[3] Restatement (Second) of Conflict of Laws § 285 (Am. Law Inst. 1971).

[4] United States v. Windsor, 570 U.S. 744, 752 (2013) (quoting Haddock v. Haddock, 201 U.S. 562, 575 (1906)).

[5] Id. at 767.

[6] Id.

[7] In re Marriage of Graham, 194 Colo. 429, 432 (1978).

[8] Id. at 431.

[9] Id.

[10] Id. at 430.

[11] Id. at 431.

[12] Id.

[13] Id. at 432.

[14] “An educational degree, such as an M.B.A., is simply not encompassed even by the broad views of the concept of “property.” It does not have an exchange value or any objective transferable value on an open market. It is personal to the holder. It terminates on death of the holder and is not inheritable. It cannot be assigned, sold, transferred, conveyed, or pledged. An advanced degree is a cumulative product of many years of previous education, combined with diligence and hard work. It may not be acquired by the mere expenditure of money. It is simply an intellectual achievement that may potentially assist in the future acquisition of property. In our view, it has none of the attributes of property in the usual sense of that term.”; Id.

[15] Id. at 432-433.

[16] Id. at 434 (Carrigan, J., dissenting).

[17] Quarty v. Quarty, 96 A.D.3d 1274, 1277 (N.Y. App. Div. 2012).

[18] Id. at 1278.

[19] Id.

[20] Id. at 1277 (quoting Esposito–Shea v. Shea, 94 A.D.3d 1215, 1217, (2012)).

[21] Id.

[22] Id. at 1278.

[23] Id.

[24] Id.

[25] Id. at 1278-1279.

[26] See Stevens v. Stevens, 23 Ohio St. 3d 115, 116 (1986).

[27] American Bar Association, Alimony/Spousal Support Factors, 52 Fam. L. Q., 581, 582-584 (2019).

[28] “(c) The ages and the physical, mental, and emotional conditions of the parties; (d) The retirement benefits of the parties; (e) The duration of the marriage; (f) The extent to which it would be inappropriate for a party, because that party will be custodian of a minor child of the marriage, to seek employment outside the home; (g) The standard of living of the parties established during the marriage; (h) The relative extent of education of the parties; (i) The relative assets and liabilities of the parties, including but not limited to any court-ordered payments by the parties; (j) The contribution of each party to the education, training, or earning ability of the other party, including, but not limited to, any party’s contribution to the acquisition of a professional degree of the other party; (k) The time and expense necessary for the spouse who is seeking spousal support to acquire education, training, or job experience so that the spouse will be qualified to obtain appropriate employment, provided the education, training, or job experience, and employment is, in fact, sought; (l) The tax consequences, for each party, of an award of spousal support; (m) The lost income production capacity of either party that resulted from that party’s marital responsibilities; (n) Any other factor that the court expressly finds to be relevant and equitable.” (quoting Ohio Rev. Code Ann. § 3105.18 (West 2020)).

[29] Beth Silverman, How is Spousal Support Determined in Ohio? Cincinnati Family Law & Divorce Blog (Dec. 15, 2014) https://bethsilverman.com/determination-spousal-support-ohio/#:~:text=There%20is%20no%20formula%20for,Ohio%20Revised%20Code%20Section%203105.18.

[30] Id.

[31] In re Marriage of Graham, 194 Colo. 429, 432 (1978).

[32] Quarty, 96 A.D.3d at 1277.

[33] Graham, 194 Colo. at 430 (1978).