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May 06, 2024 Feature

The Double Dip Concept in Divorce Cases

Melanie K. Reichert

Few attorneys dispute the emotional and financial costs of divorce. The disputes arise when attorneys and courts navigate the complex web of legal principles governing the division of assets and determination of child or spousal support. One often-debated concept that has garnered increased attention in recent years is the “double dip” issue. The double-dip arises when the same funds are counted both as income for child or spousal support and included in the valuation of an asset to be divided.

At its core, the double dip concept refers to the potential for a spouse to receive a financial windfall with the same income being used to justify two different claims in the divorce: first as a factor for calculating child support, spousal support, or alimony and then to value an asset to be divided during property division. In such cases, the spouse may effectively be “double dipping” or receiving an unfair advantage by including the same funds in both calculations. Conversely, the monied spouse may be effectively shielding income and reducing support obligations by alleging an unfair double dip.

New Jersey, California, and Ohio are among the states allowing the double dip concept to be applied in divorce cases. The rationale behind this approach is that both spousal support and property division are separate legal issues, each serving distinct purposes. Consequently, if a spouse receives income from a business, for example, that income can be factored into the support calculation and included in a valuation of a business interest to be divided. However, case law from most of the “double-dip” states treat income from a divided pension differently from a business valued using an income approach.

States such as New York and Illinois take a different stance on the double dip concept. Case law in these states hold that allowing the same funds to be counted twice would result in unfair outcomes and undermine the principle of equitable division. In these jurisdictions, the courts generally preclude the double dip by assigning the funds as either income for support or a part of an income-approach valuation, but not both.

In those states allowing the double dip, the recipient spouse may receive increased support while also benefiting from a larger share of the marital assets. Proponents argue that the double dip is actually a misconception that denies the nonmonied spouse a fair allocation of the marital assets and appropriate support. Opponents to the concept hold fast to the notion that equity and fairness require that the same funds are not included in calculations for both support and division of assets.

The double dip concept in divorce cases presents dilemmas for courts and legal practitioners across the United States. With some jurisdictions allowing it and others explicitly rejecting it, the issue has no uniform resolution. It is crucial for divorcing couples and attorneys to understand the prevailing approach in their respective states. Ultimately, the goal should be to achieve equitable outcomes that prioritize fairness, ensure a just division of assets, and provide both spouses a means for support.

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Melanie K. Reichert

Broyles Kight & Ricafort, P.C

Melanie K. Reichert is of counsel with the Family Law Group at Broyles Kight & Ricafort, P.C. in Indianapolis, Indiana. Trained in mediation and collaborative law, she emphasizes making every effort to resolve family conflict during divorce without costly and devastating litigation but is also an experienced family law litigator. Melanie advocates for children as a volunteer guardian ad litem and a private guardian ad litem.