Avoiding Unfair Double Dipping in a Connecticut Divorce
Divorce can be emotionally and financially draining, especially when assets and liabilities are divided, and you own a business or have significant business interests.
One potential issue to navigate during the process is the “double-dipping” concept in Connecticut divorce settlements.
Our experienced Connecticut divorce lawyer at StangerLaw LLC explains double-dipping and how you can avoid its pitfalls by working with a skilled attorney.
For assistance, please contact us online or call (860) 561-0651 today.
Key Points
- Double dipping in divorce occurs when the same stream of income is counted twice, once in valuing a marital asset and again when determining alimony or support.
- This issue most often arises when a business or professional practice is valued based on income that is also used to calculate future support payments.
- Double dipping disputes often require careful legal analysis, since improper income counting can significantly affect the fairness of both asset division and support awards in a divorce.
What Is Double Dipping in Divorce?
When a spouse receives a portion of the other spouse’s business as part of the property division and alimony based on the profits from that same business, this is known as double-dipping. This creates an unfair advantage for the receiving spouse, allowing them to benefit twice from the same asset.
How Does Double Dipping Occur?
Double-dipping in the financial awards in a divorce is common when valuing a business during a divorce settlement. Conventional business valuation methods like capitalization of earnings or discounted cash flow estimate a business’s present value based on its projected future income.
However, if this same income is used to calculate alimony, the paying spouse contributes twice for the same asset: once through the asset valuation and again through the ongoing support payments.
An Example of Double Dipping
David owns 100% of a successful landscaping company. In the divorce settlement, his husband, Harold, receives 40% ownership of the business. Additionally, the court awards Harold spousal support to be paid by David, based on the company’s income as paid to David in prior years when he owned 100%.
How to Avoid Double Dipping in Your Connecticut Divorce
While Connecticut courts evaluate each divorce case individually, considering various factors to determine a fair and equitable division of assets and spousal support, there are steps you can take to minimize the risk of double-dipping:
- Seek legal advice. An experienced divorce attorney can guide you through the property distribution process, negotiate on your behalf, and protect your rights. The attorney can also recommend a qualified appraiser to objectively assess your business’s value.
- Choose the right valuation method. Work with your attorney to select a method of separating business value by basing the income on earning capacity,
An experienced Connecticut divorce lawyer can significantly improve the chances of business assets being distributed fairly.
Suspect Unfair Double Dipping in Your Connecticut Divorce?
Preparation, informed decision-making, and aggressive advocacy are essential for minimizing the potential of double-dipping and the impact of divorce on your business and financial well-being.
StangerLaw LLC’s knowledgeable family law attorney has decades of experience, including evaluating the agreement after the fact to determine if there is a claim for legal malpractice that is worth pursuing.
In the case of a divorce, the goal is to resolve your legal matters as cordially and quickly as possible, from high-asset divorces to child custody disputes. Contact us online or call (860) 561-0651 today to schedule a consultation.
