Legislative changes to divorces?

Summer sunsets are fading in the rear view mirror and the kids are back to school.  September is here and many business and professional associations resume their programs and networking activities.   Accordingly, my summer hiatus from blogging has also come to an end and today I’m addressing the possible new legislation that would impact the division of marital property in divorces.

About 10 years ago, shortly after I started to provide business valuation services, I learned that if a husband or wife earned a degree or license during their marriage, in NY divorces, a value is calculated for the holder’s ability to earn more after the attainment than without it.  This is referred to as enhanced earnings capacity (EEC) and it can also arise from celebrity goodwill or career enhancement.

I have always thought that was a really interesting tidbit that you would never learn until you get a divorce (or if you are a matrimonial attorney).  When I am asked to speak to accounting students at colleges about all the different things they can do with their accounting degrees, I often bring up EEC in relation to some of the non-traditional accounting services I have provided.  They are always intrigued by the concept; no doubt because they have yet to earn their CPA licenses.

In the end, it might not matter anymore.  If the Governor signs the bill passed by the Senate in June, the EEC will no longer be treated as a marital asset in NY divorces.  As a result, I suspect there may be some strategic planning as to whether to file an action for divorce before or after the bill may become law.

Pamela Wickes
Pamela Wickes
For 20 years Pam has provided diversified accounting services, which, since 2004, have been focused in a wide variety of forensic accounting matters. Meet the Forensic Lady, Pamela Wickes, CPA, CFE, CFF, ABV.

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