Double-Dipping and Business Valuation in Divorce: Strategies to Avoid Twice Distributing the Same Income
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Family Law
- event Date
Tuesday, March 28, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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.
Mr. Gitlin exclusively practices divorce and family law. He is a published author and frequent lecturer to family lawyers both statewide and nationally a wide variety of issues including business valuation issues in divorce cases. He is Fellow of AAML and was named by the Illinois ICLE as one of five Illinois family lawyers for their 21st Century Master Teacher's Program.
Ms. Calhoun, Vice President at Mercer Capital, has been involved with hundreds of valuation and litigation support engagements in a diverse range of industries on local, national and international levels. Prior to joining Mercer Capital, she was a Senior Auditor at EY (Ernst & Young) in their Audit and Assurance Services practice.
Mr. Womack, Senior Vice President, has over 20 years of experience in business valuation. During his valuation career, he has worked with clients in a wide variety of industries and for purposes including gift and estate tax valuation, litigation support, corporate valuation, ESOPs, and financial reporting.
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.
- How the double counting problem arises
- Methods of business valuation for purposes of equitable distribution
- State court approaches to double counting
- Strategies for avoiding inequitable result of double counting
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?
