During a marriage, you share a lot of things. A house, a room, a bed and oftentimes a car or two. In addition, some spouses own a business together or separately. When the desire for unity ends, you probably want to stop sharing as well.
Divorcing couples need to divide a plethora of assets. You might worry about your ex-spouse receiving an unfair amount of payments.
Double dipping not just a term used when splitting an appetizer. In a divorce, double-dipping is a practice that calculates an asset for two different agendas. It can result in one spouse getting double payments from a single asset.
Divorce is complicated. Matters get trickier when a business is involved with the marital assets. There’s a possibility one spouse will receive not only the cash value of a business, but also receive future benefits from the business. The outcome doesn’t appear to be very balanced.
When does double dipping usually occur?
Double dipping in a divorce is usually an issue when the value of one spouse’s future income is tied in with the value of their business. The practice most commonly occurs when dealing with pensions, although other assets can be involved. Sometimes this situation is unavoidable, especially when there are multiple business partners.
Nonetheless, there are ways to minimize the danger of double dipping in the valuation of a business. The asset approach estimates the fair market value of the business, while an income approach considers the business’s cash flow. Meeting with an experienced divorce lawyer is a good first step. It’s important to be prepared and go over all your options.
