Equitable Distribution and Professional Degrees/Licenses in New York

Determining the Value of Professional Licenses, Professional Distinctions and Honors, and Businesses: Under New York Law (but not most other states), the profession or professional career potential of one spouse is considered marital property. While initially applied to a medical license, courts in New York have extended the principle to other careers requiring licenses or the development of expertise. Where it is difficult to determine the actual interest involved, the court will make a monetary distributive award.

The value of a license is the enhanced earning capacity it provides. This value is determined by the present value (average annual earnings with license minus average annual earnings without license) multiplied by the number of years remaining in worklife, multiplied by the projected wage increases. Where a spouse is actually receiving a salary, then the enhanced earning capacity is based on the actual earnings rather than statistical earnings for the profession.

Professional honors have been valued in the same way as licenses to the extent that they provide a provable enhanced earning capacity and the spouse not in possession of the honor contributed to its attainment.

In cases where a professional does not put his or her license to its "best use", i.e. realize the enhanced earning potential that the license would provide; the court will have to determine whether or not to value the license as if the full earning potential were being realized based on the particular facts of the situation.