Authored by: Randall Malone, Esq.
For divorces in New York State, the property to be equitably divided between the spouses includes not only bank accounts, pensions, and real estate, but also a special type of asset referred to as enhanced earnings. Enhanced earnings refers to the increased lifetime pay that a spouse can expect to earn from a license or degree that was earned during the marriage. To determine enhanced earnings, the court will essentially calculate the total lifetime pay that the degreed spouse should be expected to earn with the degree or license, and subtract from that the lifetime pay the spouse would likely have earned without the degree or license. The increase in lifetime pay from the degree or license is the value of the enhanced earnings from that degree.
The court will then determine the marital portion of the enhanced earnings, which is the percentage of classes or training for the degree that occurred during the marriage. Finally, the court will determine the other spouse's fair share of that marital enhanced earnings (from the degree earned during the marriage), and may award the other spouse an amount ranging anywhere between 0% to 50% of the marital enhanced earnings, depending on how much the spouse without the degree sacrificed and contributed to helping the degreed spouse earn that degree or license.
The legal concept of enhanced earnings is somewhat unique to New York, and has been controversial. New York courts have reduced awards in recent years to very low percentages (typically 5% to 25%). In addition, courts will not consider enhanced earnings in a divorce without testimony from an appropriate expert.