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Degrees And Licenses In An Illinois Divorce
Having a professional degree and license is often very lucrative (take it from me). A degree makes a person eligible for certain professional positions and a license makes a license holder an exclusive provider of some regulated service. These restrictions in supply almost always create a higher price for the services of a degree or license holder.
Should that additional compensation that one spouse receives due to their degree or license be divided in an Illinois divorce? Is there value in being a lawyer, doctor or a plumber in an Illinois divorce? Is a degree or license property in Illinois?
Division of Assets In An Illinois Divorce
Parties to a divorce must divide their physical assets and their non-physical assets if those assets are deemed to be marital.
“‘[M]arital property’ means all property, including debts and other obligations, acquired by either spouse subsequent to the marriage” 750 ILCS 5/503(a)
“For purposes of distribution of property, all property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed marital property.” 750 ILCS 5/503(b)
Anything acquired after a marriage by either party to that marriage will be deemed to be marital property.
Upon deeming an asset marital property, an Illinois divorce court “shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors” 750 ILCS 5/503(d)
Is a Degree Or License Earned During A Marriage A Marital Asset In An Illinois Divorce?
Before dividing an ‘asset’ we must determine whether it is an asset at all. In Illinois, is a degree or license property?
In Illinois, the term property has been defined as “a word of the very broadest import, connoting any tangible or intangible res which might be made the subject of ownership.” (In re Marriage of Goldstein (1981), 97 Ill. App.3d 1023, 1026, 423 N.E.2d 1201,
Property is either real, contingent or an expectancy. “An expectancy…describes the interest of a person who merely forsees that he might receive a future beneficence, such as the interest of an heir apparent or of a beneficiary designated by a living insured who has a right to change the beneficiary.” In re Marriage of Hunt, 397 NE 2d 511 – Ill: Appellate Court, 1st Dist. 1979 (citations and quotes omitted)
The money from an expectancy is not guaranteed like a pension’s payout is guaranteed. In the case of a degree or a license, the degree or license holder must still work in order to gain any benefit from the degree or license.
“[P]rofessional licenses and scholastic degrees do not constitute a property interest subject to division as a marital asset” In re Marriage of Thornley, 838 NE 2d 981 – Ill: Appellate Court, 4th Dist. 2005
“Courts which have refused to recognize a degree or license as marital property have justified this result either on the grounds that the degree or license is not “property” because it cannot be assigned, transferred, sold, conveyed, pledged, or inherited.” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
“A degree or license is at most a mere expectancy of some future income or earnings. Neither has a present assignable value, as neither can be sold as can other items of an intangible nature such as goodwill of a business nor can either be said to represent a guarantee of receipt of a set amount in the future such as pension benefits” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
Degrees and licenses will not be valued and will not be divided in an Illinois divorce. But that does not mean that degrees and licenses will not be considered in an Illinois divorce.
Degrees allow a spouse to open a business such as a law firm, a dental practice or an accounting firm. Those businesses are divisible in an Illinois divorce.
How Can A Spouse Who Supported Their Degreed Or Licensed Spouse Be Compensated For That Support In An Illinois Divorce?
“Illinois law presently provides an ample method for compensation to the contributing spouse through traditional remedies, without the need to resort to adoption of a hard and fast rule that a spouse’s degree or license earned during the marriage is to be considered a marital asset even under limited circumstances.” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
Marital assets are not divided equally in an Illinois divorce.
“The [Illinois Marriage and Dissolution of Marriage] Act does not require an equal division of marital property, but an equitable division” In re Marriage of Jones, 543 NE 2d 119 – Ill: Appellate Court, 1st Dist. 1989
In an Illinois divorce, marital assets are divided fairly considering all of the circumstances…including who has what degree or license.
“A fair and equitable distribution of assets does require the court to take the surrounding circumstances of the parties into account.” In re Marriage of Abma, 720 NE 2d 645 – Ill: Appellate Court, 1st Dist., 1st Div. 1999
“Rather than being classified as marital assets, a spouse’s professional degree or license, earned while married through the financial support of the other spouse, is a relevant factor in distribution of the couple’s marital assets and liabilities.” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
Each spouse’s contribution to the acquisition of both marital and non-marital property will be considered in arriving at an equitable division of marital assets.
Illinois divorce courts are to consider “each party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property” 750 ILCS 5/503(d)(1)
This would allow a court to consider a couple who supported each other’s acquisition of a degree or license in advance of being married.
“[T]here is nevertheless clear agreement that the contributing spouse should be entitled to some form of compensation for the financial efforts and support provided to the student spouse in the expectation that the marital unit would prosper in the future as a direct result of the couple’s previous sacrifices.” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
Beyond a mere greater share of the marital assets, a court can award a supporting spouse additional maintenance or an itemized repayment of the support that allowed for the acquisition of the degree or license.
“[T]hree alternative methods to permit such compensation: (1) distribution of marital assets and liabilities, (2) some form of maintenance or alimony, or (3) an equitable monetary award to the spouse based on unjust enrichment or some other equitable principle.” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
A maintenance award beyond the mere maintenance guidelines could be made based on a supporting spouse’s contribution to the other spouse’s acquired license or degree.
Maintenance is usually a strict formula of 33% of the supporting spouse’s net income less 25% net of the receiving spouse’s net income (not to exceed 40% of the total incomes of both parties).
Illinois divorce courts are allowed to deviate from guidelines maintenance under certain circumstances…including consideration of prior contribution to a spouse’s earning potential.
“Any non-guidelines award of maintenance shall be made after the court’s consideration of all relevant factors” 750 ILCS 5/504(b-1)(2)
A relevant factor is the “contributions and services by the party seeking maintenance to the education, training, career or career potential, or license of the other spouse” 750 ILCS 5/504(a)(12)
Finally, an Illinois divorce court can order the degreed or licensed spouse to pay the supporting spouse back for their contributions towards the degree or license.
“[A] separate monetary award to the contributing spouse as compensation for funds advanced to defray the student spouse’s educational costs and living expenses. Courts have usually followed this approach when the traditional methods of property distribution and maintenance were not sufficient to reach an equitable result, and have relied upon the trial court’s inherent equitable powers and the theory of unjust enrichment to justify such awards.” In re Marriage of Weinstein, 470 NE 2d 551 – Ill: Appellate Court, 1st Dist. 1984
This solution makes sense for the recent law of medical school graduate whose future income may be significant but their current income and assets are meager.
Student Loans And Divorce In Illinois
Degrees and licenses often have student loans associated with the education necessary to earn those degrees and licenses.
Illinois divorce courts will almost always allocate those student loan debts to the beneficiary of the education that those student loans paid for.
Again, an Illinois divorce court will consider “each party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital [debt]” 750 ILCS 5/503(d)(1)
Illinois divorce courts will also allocate debt based on “the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and needs of each of the parties” 750 ILCS 5/503(8)
Illinois divorce courts are not required to divide marital debt. Illinois divorce courts can allocate the entirety of a debt to a single party so long as they have a basis to do so.
“Where one party is substantially responsible for the creation of the debt and has a substantially greater capacity to earn money, it is not an abuse of discretion for the trial court to assign the overwhelming majority of debt to that party.” In re Marriage of Werries, 247 Ill. App. 3d 639, 649-51 (1993)
Do not rely on tired tropes like saying “I put him through medical school.” Instead, use the law to get what you deserve. If you hold a degree or license, that degree or license will help to generate future income that is not marital and does not need to be divided. Contact my Chicago, Illinois family law firm today to learn more about your rights in your Illinois divorce.