Wage Distribution in Divorce Proceedings

Friday, May 8th, 2009

During divorce proceedings, the court will value a person’s exceptional wage earning abilities and distribute a part of it to the spouse. This comprehensive decision was written by a Supreme Court judge in New York. He concluded that the personal good will inherent in one’s career should be considered as a marital asset and must be subject to court evaluation and subsequent distribution upon divorce.

In fact, there have been many divorce decisions that recognized this – licenses and degrees were considered as valuable property rights. But it’s clear that whether corporate executives earned licenses or degrees during their careers, their career expertise would still be subject to equitable distribution.

For example, a corporate executive (even with an undergraduate degree) earns $35,000 in a year. But because of the experience and special skills acquired during marriage, the salary increased to $350,000 a year. In this case, the courts will determine the average pay of college graduates in the area (say $85,000), deduct it to the present value sum ($350,000 less $85,000 = $265,000), multiply the years before reaching retirement (say 15 years), and then discount the result to the present value sum.

So for our example, $265,000 multiplied by 15 years is $3,975,000 in enhanced earnings. The discount amount may only be $1,800,000 depending on the discount rate employed.

Most people are truly shocked by this. Nevertheless, this type of computation is often played in divorce courts. But since this evaluation process is more of an art than an exact science, selecting an experienced divorce lawyer will surely soften the blow.

Tags: court, Divorce, Divorce Lawyer, earnings, lawyer, New York
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