Articles

Nebraska Supreme Court Rules that a Professional Degree is Not Marital Property

By Jeffrey L. Hansen

In a recent opinion from a divorce case, Schaefer v. Schaefer, 263 Neb 785, 642 N.W.2d 792 (2002), in which Simmons Olsen’s Jeff Hansen was an attorney of record, the Nebraska Supreme Court ruled that a professional degree attained during the marriage is not marital property susceptible to division. Prior to this case, the status of the law in Nebraska on this issue was unclear. The minority view on the issue of valuing professional degrees generally comes from New York which has held that a professional degree is marital property which can be valued and divided equitably in a divorce proceeding. See, Grunfeldt v. Grunfeldt, N.Y. App. Dab. Nos. 2657 - 2658, April 1999. The majority view has held that professional degrees are not marital property but have held that compensation is discretionary depending upon the equities of each particular case. See, Guy v. Guy, No. 98-CA-00276 (Miss. 1999); Plastema v. Plastema, 471 N.W.2d 912, (Mich. App. 1991); St. Pierre v. St. Pierre, supra.

The courts have not actually valued a degree but have compensated a supporting spouse using alternate methods of compensation. Generally, the theory is called reimbursement alimony. Under this theory, the court will award the entitled spouse in either a lump sum or installments to assist a supporting spouse for the financial support given to the student spouse during the marriage. In addition, once the court has determined that reimbursement alimony is relevant, the next step is to determine how to calculate the support and place a value on the degree itself. The valuation must be reasonable.

One method for determining the value of a law degree is the cost of the law degree itself. This approach takes into consideration the actual dollar amount provided and does not consider any sacrifices of the spouse entitled to reimbursement alimony. An alternate method is to have the court consider many different factors including sacrifices, length of marriage after the degree was obtained, support and extent of financial support and overall accumulation and division of the marital estate.

A final method the court can consider takes into account the difference between a spouse’s remaining earnings per year with the median income of an average attorney admitted into the bar the same year. Grundfeldt v. Grundfeldt, supra. The Nebraska courts have alluded to the theory of reimbursement alimony but to date have not taken a position on the valuation of a professional degree in divorce. See Kosnophfl v. Kosnophfl, 206 Neb. 524, 293 N.W.2d 854 (1980).

In an unpublished opinion, the court in Hansen v. Haymer, No. 8-92-112A, Neb. App. (1994) determined that the criteria in Neb. Rev. Stat. §42-365 is relevant for alimony situations where one spouse assisted the other spouse with an advanced education.

In Mahoney v. Mahoney, 453 A.2d 527, 535 N.J. (1982), the court stated:

"Marriage cannot be a free ticket to professional education for anyone without subsequent obligations. . . One spouse ought not to receive a divorce complaint and the other receive a diploma. Those spouses supported through professional school should recognize that they would be called upon to reimburse the supporting spouses with financial contributions they received in pursuit of professional training. And they cannot deny the fairness of this result."

In Schaefer, the court stated:

The overwhelming majority of jurisdictions that have addressed this issue have declined to expressly place a value on a professional degree. We agree with that view. See, Guy v. Guy, 736 So.2d 1042 (Miss.1999); In re Marriage of Speirs, 956 P.2d 622 (Colo.App.1997); Roberts v. Roberts, 670 N.E.2d 72 (Ind.App.1996); Stevens v. Stevens, 23 Ohio St.3d 115, 492 N.E.2d 131 (1986). As Lockwood testified, the value of a professional degree is dependent upon its use by the individual, and any method of valuation is thus purely speculative. See id. We note, however, that §42-365 requires a dissolution court to divide property and award alimony in a reasonable manner, having regard for, inter alia, the circumstances of the parties and the history of contributions to the marriage. Pursuant to this statutory language, the attainment by one spouse of a professional degree with aid from the other is one factor a district court may consider in the division of assets and award of alimony in a marital dissolution proceeding. On the facts and records of this case, the district court did not abuse its discretion in its division of the assets and its award of alimony.

Therefore the result of Schaefer is that Nebraska has accepted the majority view that professional degrees are not marital property capable of division, rather, the court can use discretion on considering that type of evidence in making an property division and alimony award.