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Double-Dipping and Business Valuation in Divorce: Strategies to Avoid Twice Distributing the Same Income

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, March 28, 2023

Recorded event now available

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This CLE webinar will offer guidance to family law counsel grappling with the complex issues of double counting of income that surface when the parties capitalize the income from a business or professional practice to establish its value for purposes of equitable distribution and then order payment of that same income as future maintenance or support payments. The panel will discuss how to determine if double counting (or double dipping) even occurred, the confusing methodologies used to address the problem, what happens if the double counting problem is not solved, and how to avoid the inequitable result of twice distributing the same income.

Description

When courts distribute the value of a business or professional practice but fail to adjust the business' income stream when calculating spousal support, they create a suffocating and virtually insurmountable burden for the payor spouse, a problem known as double counting or double-dipping. Furthermore, identifying double-dipping can be challenging.

Courts are divided as to whether double-dipping should ever be permitted to achieve an equitable outcome. Some jurisdictions entirely allow or prohibit double-dipping, while others take a case-by-case approach and consider the facts and circumstances of each divorce. Many approaches have proven difficult to apply while also generating questionable results.

Listen as our esteemed panel discusses the complex issue of double counting that can arise in business valuation and calculation of spousal support. The panel will offer guidance on identifying and distinguishing between assets and income, review the differing judicial approaches to double-dipping and asset distribution, and provide strategies for structuring settlements.

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Outline

  1. How the double counting problem arises
  2. Methods of business valuation for purposes of equitable distribution
  3. State court approaches to double counting
  4. Strategies for avoiding inequitable result of double counting

Benefits

The panel will review these and other key issues:

  • Assuming that some portion of earnings is capitalized, and distributed as an asset, does the owner have any more income which can be used for spousal support?
  • Does double dipping only occur when valuation of the business or practice includes "good will"?
  • Which valuation methods most often create a double counting problem?
  • What weight is given to future profits and appreciation when evaluating settlements and awards?

Faculty

Gitlin, Gunnar
Gunnar J. Gitlin, J.D.
Attorney
The Gitlin Law Firm

Mr. Gitlin exclusively practices divorce and family law. He is a published author and frequent lecturer to...  |  Read More

Calhoun, Karolina
Karolina Calhoun, CPA, ABV, CFF
Vice President
Mercer Capital

Ms. Calhoun, Vice President at Mercer Capital, has been involved with hundreds of valuation and litigation support...  |  Read More

Womack, Scott
Scott A. Womack, ASA, MAFF
Senior Vice President
Mercer Capital

Mr. Womack, Senior Vice President, has over 20 years of experience in business valuation. During his valuation career,...  |  Read More

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