Double Dipping in a Divorce
There is a concept that divorce lawyers are very familiar with: “Double Dipping”. A simplistic explanation is that in a divorce, sometimes an asset like a business is valued and divided, but then the income from that asset is used to calculate and pay child support or alimony. Is this fair? There are multiple arguments. One argument is that to pay the spouse his or her share, it would be as if the payor is making a hypothetical sale of the asset and paying the other spouse. In such a “hypothetical” sale, there would be no more asset to use to calculate or pay child support or alimony.
But here’s the big news (at least to family law attorneys): California is considering passing legislation to avoid this dilemma. Here is the text of the proposed legislation:
(n) The extent to which income for support was already capitalized
and paid to the other spouse in the division of community property,
to avoid double counting the income when the result would be
inequitable, based on all of the circumstances presented.
Whether one agrees with this bill or not, at least it will, if passed, give the California courts guidance in thsi area. Hopefully other states will follow this example.