The defendant appeals and the plaintiff cross appeals from the property distribution provisions of a February 3, 1989, judgment of divorce. The primary issue concerns the valuation of defendant’s law degree and whether the trial court erred in finding the law degree to be a marital asset. We affirm in part and remand.
Plaintiff and defendant were married on August 11, 1984. At the time of their marriage, defendant
Defendant proved to be a successful law student and wrote for the school’s law review. After defendant graduated in May 1987, the parties moved back to the Grand Rapids area, where defendant accepted a position as an associate attorney with a local law firm at a starting annual salary of $41,000. The following September, plaintiff resumed classes in pursuit of her associate’s degree in nursing. In November 1987, however, the parties
Plaintiff testified that marital problems developed early in the marriage. She said defendant would often complain that she was overweight, saying it embarrassed him, and that he would start many verbal fights, usually over things that were insignificant. She claimed the situation got to the point where her whole life revolved around trying not to agitate defendant. Defendant testified that he often asked plaintiff to leave, complained that she was a "fanatic” about cleaning, and admitted that he once presented her with a list of things for her to remember to do so that she wouldn’t "irritate” him. Although defendant agreed that he was sometimes difficult to live with and that he treated plaintiff badly from time to time, he blamed it on the stress of law school. According to plaintiff, defendant would often apologize the day after a fight, sometimes verbally and sometimes in a letter. The parties finally separated on November 7, 1987, after defendant informed plaintiff that he had met another woman and had gone out with her a couple of times while plaintiff was working.
The trial court found that the breakdown of the marriage was primarily the fault of defendant, and announced it had considered this fact in its property distribution. After awarding each of the parties their respective automobiles, the trial court awarded plaintiff specific household goods and bank funds totaling $5,000, while awarding defendant specific goods and funds totaling $3,000. Defendant was also held solely responsible for repayment of $14,000 in student loans. Finally, the trial
Defendant now appeals and plaintiff cross appeals as of right. The issues raised on appeal involve the Supreme Court’s recent Administrative Order No. 1990-6,
The goal of a trial court with respect to the division of the marital estate is a fair and equitable distribution under all of the circumstances.
Greaves v Greaves,
Panels of this Court have expressed different views concerning the treatment, characterization, and valuation of an advanced degree in a divorce situation. Nevertheless, most panels have agreed that
fairness
dictates that a spouse who did not earn an advanced degree be compensated whenever the advanced degree is the end product of a
concerted family effort
involving mutual sacrifice and effort by both spouses.
Beckett, supra,
p 155;
Lewis v Lewis,
In addressing the issue involving defendant’s law degree, we will begin by first discussing the rationale behind the recognition that a nonstudent spouse must be compensated whenever a concerted family effort is involved in obtaining an advanced degree, which discussion will include an application of the concept "concerted family effort” to the facts of the instant case. Secondly, we will discuss what we believe to be the appropriate and preferable means of characterizing a claim for compensation involving an advanced degree. Finally, we will address the factors and methods that we believe are relevant in valuing such a claim upon divorce.
A. THE CONCERTED FAMILY EFFORT.
As indicated above, an award of compensation to a nonstudent spouse is premised upon both general
Second, the concept "concerted family effort” stresses the fact that it is not the existence of an advanced degree itself that gives rise to an equitable claim for compensation, but rather the fact of the degree being the end product of the mutual sacrifice, effort, and contribution of both parties as part of a larger, long-range plan intended to benefit the family as a whole. The concept is premised, in part, on the fact that the attainment of an advanced degree is a prolonged undertaking involving considerable expenditure of time, effort, and money, as well as other sacrifices. Where such an undertaking is pursued as part of a concerted family effort, both spouses expect to be compensated for their respective sacrifices, efforts, and contributions by eventually sharing in the fruits of the degree. Where, however, the parties’ relationship ends in divorce, such a sharing is impossible. Although the degree holder will always have the degree to show for the efforts, the nonstudent spouse is left with nothing. Therefore, a remedy consistent with fairness and equity requires that an attempt be made to at least return financially to the nonstudent spouse the value of what that spouse contributed toward attainment of the degree.
Generally, the existence of a concerted family effort will be reflected in many ways. For instance,
Turning now to the instant case, the facts show that plaintiff temporarily postponed her pursuit of
We conclude, therefore, that defendant’s law degree was clearly the end product of a concerted family effort giving rise to an equitable claim for compensation in favor of plaintiff in recognition of her unrewarded sacrifices, efforts, and contributions toward attainment of the degree.
B. CHARACTERIZATION OF A CLAIM FOR COMPENSATION INVOLVING AN ADVANCED DEGREE.
Despite the common recognition among panels of this Court that a spouse who did not obtain an advanced degree should be compensated whenever the degree is the end product of a concerted family effort, panels are in disagreement over the appropriate manner in which a claim for compensation should be considered. While some panels have characterized an advanced degree as a marital asset subject to property division,
Thomas v Thomas,
After reviewing the various decisions addressing the issue and taking into consideration the underlying principles upon which an award of compensation for an advanced degree is premised, we reject the view holding that an advanced degree is more properly considered as a factor in awarding alimony.
The cases adhering to the alimony view,
Krause, supra,
and
Olah, supra,
have stated that a degree is simply not "property” for the reasons expressed in
Graham v Graham,
194 Colo 429, 432;
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.
In rejecting the alimony approach, we first recognize that the basic purpose of paying alimony is to assist in the other spouse’s support.
Lewis, supra,
p 6;
Johnson v Johnson,
Moreover, as pointed out in both
Woodworth, supra,
pp 267-268, and my concurring opinion in
Olah, supra,
p 414, an award in terms of alimony may unfairly jeopardize a spouse’s recognized right to compensation because a trial court has broad discretion in deciding whether to grant alimony,
Westrate v Westrate,
Finally, contrary to the observations in
Graham, supra,
we do not believe that the consideration of an advanced degree when making the property distribution would be improper merely because a degree cannot be characterized as "property” in the classic sense. Rather, we agree with
Wood-worth, supra,
p 263, that "whether or not an advanced degree can physically or metaphysically be defined as 'property’ is beside the point[;] [c]ourts must instead focus on the most equitable solution to dissolving the marriage and dividing among the respective parties what they have.” Furthermore, as I stated in my concurring opinion in
Olah, supra,
p 412: "This is an equitable distribution jurisdiction, in which classification of an item as either property or non-property is not decisive in determining the best division of the parties’ holdings on divorce.” Finally, in
Lewis, supra,
p 6, this Court added: "[T]he fundamental question in cases involving advanced degrees is not whether a degree is property, but rather 'whether the facts in the case give rise to an
equitable claim
regarding the degree so that a property division
We conclude, therefore, that where an advanced degree is the end product of a concerted family effort, involving the mutual sacrifice, effort, and contribution of both spouses, there arises a "marital asset” subject to distribution, wherein the interest of the nonstudent spouse consists of an "equitable claim” regarding the degree.
C. VALUATION.
Having found that a marital asset giving rise to an "equitable claim” subject to distribution exists where an advanced degree is the end product of a concerted family effort, we will now discuss the appropriate factors and considerations relative to an evaluation of such a claim for purposes of distributing property.
Woodworth, supra, pp 268-269, discussed two methods of compensating a nonstudent spouse for an interest in an advanced degree: (1) awarding a percentage share of the present value of the future earnings attributable to the degree, or (2) restitution. The first method focuses on the degree’s present value by attempting to estimate what the person holding the degree is likely to make in a particular job market and subtracting therefrom what that person would probably have earned without the degree. Id. According to Woodworth, the nonstudent spouse should then be awarded a percentage share of this value after considering (1) the length of the marriage after the degree was obtained, (2) the sources and extent of financial support given to the degree holder during the years in school, and (3) the overall division of the parties’ marital property. Id. The second method is less involved, because it focuses on the cost of obtaining the degree. Id.
It is difficult to tell from the record how the trial court arrived at its initial $80,000 valuation figure. Further, while we certainly agree that plaintiff is entitled to be compensated for her unrewarded sacrifices, efforts, and contributions toward the attainment of defendant’s law degree, our review of the record reveals that the trial court’s ultimate award of $32,000 failed to account for several relevant and applicable considerations. Accordingly, we conclude that the appropriate remedy in this case is to remand to the trial court for revaluation of plaintiff’s "equitable claim” in light of this opinion. On remand, we do not believe that the present value method discussed in
Woodworth,
and purportedly used by plaintiff’s expert, is an appropriate means by which to evaluate plaintiff’s equi
[W]e believe that defendant is not entitled to any award specifically designed to compensate her for a portion of the 'value’ of plaintiff’s degree. Rather, we believe that the trial court may consider defendant’s assistance to plaintiff in determining an appropriate award....
[T]he trial court must keep in mind that it is compensating defendant for her assistance to plaintiff while he pursued his degree. Thus, the so-called 'value’ of the degree or plaintiff’s potential income to be earned from having the degree is irrelevant to the analysis. The trial court must focus solely on what is necessary to compensate defendant for the burdens on her or the sacrifices made by her so that plaintiff could pursue his degree.
This Court, in
Krause, supra,
pp 194-197, quoted at length from a portion of an opinion by the Appellate Division of the Superior Court of New Jersey in
Mahoney v Mahoney,
182 NJ Super 598;
The termination of the marriage represents, if nothing else, the disappointment of expectations, financial and nonfinancial, which were hoped to be achieved by and during the continuation of the relationship. It does not, however, in our view, represent a commercial investment loss. Recompense for the disappointed expectations resulting from the failure of the marital entity to survivecannot, therefore, be made to the spouses on a strictly commercial basis ....
If the plan fails by reason of the termination of the marriage, we do not regard the supporting spouse’s consequent loss of expectations by itself as any more compensable or demanding of solicitude than the loss of expectations of any other spouse who, in the hope and anticipation of the endurance of the relationship and its commitments, has invested a portion of his or her life, youth, energy and labor in a failed marriage. [Krause, supra, pp 195-196.]
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, p 263; Watling, supra, p 627. In this regard, we agree with Wood-worth 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
Furthermore, an equitable remedy may be exemplified in different ways. For example, as this Court recognized in Krause, supra, pp 197-198: "[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
We note in this case that the parties separated shortly after defendant attained his law degree. Thus, plaintiff received little reward, if any, for her sacrifices, efforts, and contributions toward defendant’s degree. Further, while defendant did contribute some financial support during the degree-earning period, it was plaintiff who accounted for the vast majority of it, approximately eighty percent. Moreover, while defendant certainly worked hard in obtaining his degree, it is abundantly clear from the record that plaintiff’s nonpecuniary efforts and contributions toward the degree were indeed significant also, and that she certainly endured many hardships and sacrifices as a result of her participation in the law school experience. We also note that while plaintiff did ultimately further her own career objectives in the manner she chose, she was required to do so on her own and did not have nearly the same benefits, financial or otherwise, that defendant had while he attended school. Defendant was, however, primarily responsible for the actual cost of his education, which was financed mostly through student loans for which he remains solely responsible. These are just some of the factors which were not discussed by the trial court, but yet are relevant to the valuation of plaintiff’s equitable claim involving the degree. Therefore, these factors shall be considered by the trial court on remand.
After valuing plaintiff’s equitable claim, the trial court may order that the amount determined to be due be payable in monthly installments over a fixed period of time. Furthermore, interest shall be computed in accordance with
Thomas v Thomas (On Remand),
II. defendant’s remaining issues on appeal.
First, in light of our conclusion that an advanced degree is to be considered in making a property distribution, we find it unnecessary to review defendant’s claim that plaintiff is not entitled to an award of alimony, given that such an award was not made by the trial court, and that such decision has not been challenged by plaintiff.
Next, defendant argues that the trial court erred in failing to consider plaintiff’s nursing degree as part of the marital estate. We disagree. The record discloses that plaintiff pursued this degree before the parties were married and after the parties separated. Further, such a degree is not an advanced degree. See
Sullivan v Sullivan,
Defendant also challenges the trial court’s decision regarding the parties’ automobiles. The trial court awarded plaintiff her 1985 Mazda and defendant his 1984 Fiero. The court considered the source of the funds used to purchase the vehicles, noting that plaintiff’s vehicle was paid for in part by a $5,000 gift from plaintiff’s father, along with the debt remaining on the vehicles. The court concluded that an award of each vehicle to the
Nor do we find any error in the trial court’s decision to exclude plaintiffs $10,000 certificate of deposit from the marital estate, because the certificate of deposit was acquired by plaintiff prior to the marriage and was held jointly by her and her grandfather. See
Grotelueschen v Grotelueschen,
Finally, defendant argues that the trial court "neglected several other tangible assets when dividing the marital estate.” We disagree. The items defendant mentions are miscellaneous furnishings and household items which were not the subject of specific testimony at trial. In distributing the marital estate, the trial court mentioned only the "major” items, indicating that those items not specifically mentioned would be awarded to the party in possession. On the basis of a thorough review of the record, we find no reason to disturb this decision.
Accordingly, the remainder of the trial court’s property distribution is affirmed.
Affirmed in part and remanded for proceedings consistent with this opinion regarding the valuation of plaintiffs equitable claim involving defendant’s law degree. We do not retain jurisdiction.
Notes
According to Black’s Law Dictionary (4th ed), the word "alimony” derives from "alimonia,” meaning sustenance in Latin, and means, therefore, the sustenance or support of the wife by her divorced husband and stems from the common-law right of the wife to support by her husband.
See
Cloyd v Cloyd,
These underlying assumptions concern annual salary figures, promotions, tax rates, and calculations designed to account for the fact that, over time, earnings are attributable more to the individual degree holder’s personal skills and effort, rather than to the degree itself.
Although Krause supports the alimony approach with respect to treatment of an advanced degree, a view we reject in this opinion, we believe its analysis relative to the appropriate considerations for evaluating such a claim are just as applicable in the context of a property distribution analysis.