Courts in New York have long held that intangible assets such as enhanced earning capacity, professional licenses, and even celebrity status may constitute marital property and, as such, may be valued and subject to equitable distribution. When this is the case, the value of such assets is properly the subject of expert testimony.
The “novel argument” at issue in Silverman v. Silverman, however, did not involve the value of such an intangible asset. Rather, in Silverman, the issue was whether the husband—who had developed business assets during the marriage worth $450 million—should be permitted to offer into evidence at trial “psychological assessments of the Husband’s personality and innate intellectual talents as evidence of his contributions to the accumulation of marital assets subject to equitable distribution” in the divorce action. In seeking to have such evidence admitted, the husband sought to reduce the wife’s share of the marital assets by proving his substantially greater contribution to their acquisition based on what economists would call “human capital” that the husband attributed to his self-described superior psychological make-up.
The court cited two separate bases for granting the wife’s motion to exclude such expert testimony. First, the court noted the threshold question of determining admissibility of expert testimony—i.e., whether the expert has factual knowledge or skill outside the scope of that possessed by the trier of fact—and held that the expert testimony proffered by the husband would not assist the court in determining the parties’ relative contributions to the accumulation of assets during the marriage. Indeed, the court held that the expert testimony which the husband sought to adduce would supplant “precisely the judgment and discretion which the court must exercise in the performance of its equitable powers pursuant to” New York’s equitable distribution statute.
Second, the court cited the husband’s erroneous interpretation of two of the statutory factors requiring consideration by courts in the equitable distribution of marital assets. The court rejected the husband’s argument that the expert testimony he sought to introduce was relevant to the court’s consideration of “the direct or indirect contribution to the acquisition of such marital property by the party not having title” (Domestic Relations Law [DRL] § 236[B][d]) because that factor required consideration of the wife’s contributions to the economic partnership, not the husband’s contributions. The court also rejected the husband’s argument that the expert testimony at issue was relevant to the court’s consideration of “the property of each party at the time of the marriage” (DRL § 236[B][d]) based upon its erroneous assumption that the husband’s personality and intellect constituted an asset to be characterized as either separate or marital property. In doing so, the court held that inherent in the analysis of intangible assets such as enhanced earning capacity is the presumption that such assets were developed during the marriage, not before. As a result, the husband’s pre-marital personality and intellect did not qualify as “property” to be considered in the equitable distribution of the marital assets.
In sum, the decision in Silverman appears to reject the implied proposition advanced by the husband that the concept of intangible assets can be expanded for use as a shield by a titled spouse by scientifically linking a party’s innate personality traits and abilities, through expert testimony, to the accumulation of wealth during the marriage. Taken to an extreme, such a position could result in all assets accumulated during the marriage as the result of one party’s direct efforts being either excluded from the marital estate as the fruits of separate property efforts, or found to be the result of a substantially greater contribution by the titled spouse. Such a result would undermine the goal of the equitable distribution statute, essentially eliminating its central concept of marriage as an economic partnership, and the Silverman decision deftly avoids that outcome.
Alton L. Abramowitz has lectured and written on many family law subjects for numerous bar associations and for various legal publications, and was one of the foremost advocates for the recent reform of New York’s divorce laws by the enactment of “no fault divorce.” With his wife and daughter, Alton resides in Manhattan, where he has been active in local community organizations.
Leigh Baseheart Kahn joined the firm in 2007 and practices exclusively in the area of matrimonial and family law. Leigh is a member of the New York State Bar Association, Family Law Section, and of the Association of the Bar of the City of New York, where she was a member of the Committee on Matrimonial Law from 2005 through 2008.