When teaching marital property, a common problem arises concerning situations where one spouse supports another spouse to pursue an education. This entails one spouse working, paying tuition, taking out loans, assuming more household duties, and other tasks, to ensure that the other spouse can finish an education. In almost every case, this arrangement is made because of the increased earning potential for the couple with the degree. The dispute arises, however, when the spouse who went to school divorces the supporting spouse–and in particular when this separation is shortly after the schooling is completed, or the bills are paid.
Courts are forced to grapple with two related question. First, should all of the time and money the supporting spouse contributed to the marriage be considered for purposes of division of assets and awards of spousal support. Second, is the degree itself (and it’s capacity for increased earning potential over a lifetime) marital property that should be separated in the division of assets, or be factored into awards of spousal support.
More often than not when I teach these cases, the situation is a husband studying while the wife puts him through school. The leading case in the textboooks is In Re Marriage of Graham. Here, a husband obtained an MBA while his wife toiled away as a flight attendant. Shortly after he graduated, he sought a divorce. This case presents the question of whether the future earning potential of an MBA is marital property. The Colorado Supreme Court said it as not marital property. This is the general rule. In nearly every state (New Jersey and I think New York excepted), the future earning potential of a degree is not considered marital property, nor is the money contributed by the supporting spouse, but the increased earning potential can be a factor when calculating spousal support. Also, these cases are a good time to explain to law students the value of a law degree over a lifetime.
In reading an article about Wendy Davis, the Democratic candidate for Governor here in Texas, I saw similar issues pop up. Her second husband, a lawyer thirteen years her senior, supported her financially while she finished her undergraduate education at TCU, and paid for her tuition at Harvard Law School. He reports (and of course, there is reason to take this with a grain of salt as they had a contested divorce) that right after he made the last payment to her student loans, “the next day she left.”
Here is the account from the Dallas Morning News:
A single mother working two jobs, she met Jeff Davis, a lawyer 13 years older than her, married him and had a second daughter. He paid for her last two years at Texas Christian University and her time at Harvard Law School, and kept their two daughters while she was in Boston. When they divorced in 2005, he was granted parental custody, and the girls stayed with him. Wendy Davis was directed to pay child support. …
While they dated, Wendy Davis enrolled at Texas Christian University on an academic scholarship and a Pell Grant. After they married, when she was 24, they moved into a historic home in the Mistletoe Heights neighborhood of Fort Worth.
Jeff Davis paid for her final two years at TCU. “It was community resources. We paid for it together,” Wendy Davis said.
Under Texas community property law, that is exactly right. Any money brought into the marriage obtained during the marriage is presumptively community.
When she was accepted to Harvard Law School, Jeff Davis cashed in his 401(k) account and eventually took out a loan to pay for her final year there.
“I was making really good money then, well over six figures,” he said. “But when you’ve got someone at Harvard, you’ve got bills to pay, you’ve got two small kids. The economy itself was marginal. You do what you have to do, no big deal.”
The daughters, then 8 and 2, remained with Jeff Davis in Fort Worth while Wendy Davis was at Harvard.
Over time, the Davises’ marriage was strained. In November 2003, Wendy Davis moved out.
Jeff Davis said that was right around the time the final payment on their Harvard Law School loan was due. “It was ironic,” he said. “I made the last payment, and it was the next day she left.”
Wendy Davis provides an alternate account:
Wendy Davis said that as a lawyer, she contributed too.
“I was a vibrant part of contributing to our family finances from the time I graduated to the time we separated in 2003,” she said. “The idea that suddenly there was this instantaneous departure after Jeff had partnered so beautifully with me in putting me through school is just absurd.”
And what was the outcome of the divorce?
In his initial divorce filing, Jeff Davis said the marriage had failed, citing adultery on her part and conflicts that the couple could not overcome. The final court decree makes no mention of infidelity, granting the divorce solely “on the ground of insupportability.”
Amber was 21 and in college. Dru was in ninth grade. Jeff Davis was awarded parental custody. Wendy Davis was ordered to pay $1,200 a month in child support.
“She did the right thing,” he said. “She said, ‘I think you’re right; you’ll make a good, nurturing father. While I’ve been a good mother, it’s not a good time for me right now.’”
Wendy Davis declined to discuss the circumstances or terms of the divorce.
I don’t know if the husband sought to return any value he paid towards her education during the divorce, but he would probably lose that case.