What Is Double Dipping?
Double-dipping refers to counting an asset once for purpose of
dividing community property and again for determining
spousal support or
child support. Double-dipping typically arises in cases involving an ownership interest
in a business or financial investment, such as retirement accounts and
Under California law, all
community property is subject to equal division between the parties upon
divorce. All property and assets acquired during marriage are considered to be
community property. In contrast, property that a spouse acquired before
marriage, during marriage through gift, bequest, devise, or descent, and
after the date of separation qualifies as the acquiring spouse’s
separate property. The separate property interest of a spouse is not subject to division
Furthermore, spousal support obligations are determined based on a spouse’s
financial condition. The financially disadvantaged spouse must demonstrate
both a need for spousal support and that the other spouse has enough wealth
to pay for their support.
When determining the amount someone owes in spousal support, the court
will evaluate the parties’ respective financial conditions, including
sources of income, assets, and liabilities. Double dipping occurs when
an asset—such as a small business—is included as community
property subject to equal division upon divorce, and as a part of the
owner spouse's wealth for calculating child or spousal support.
The Effect of Double Dipping
Some argue that double-dipping improperly inflates a party’s wealth
for determining issues of spousal support. For example, if a business
is considered community property, both parties are entitled to half of
the company’s value. However, if the full value of an asset is included
for purposes of determining spousal support, the community interest of
the spouse requesting support is then attributed to the other spouse’s
income. As a result, the supporting spouse’s wealth includes an
amount from which they cannot benefit—the other spouse’s community interest.
Another problem involves
valuations of business goodwill attributable to the effort an owner contributes through their hard work
and reputation in operating their business. The owner’s ability
to make money running their business might get folded into a valuation
of the business as a whole.
Thus, when the value of the owner’s business is also counted as an
asset for purposes of determining spousal support, payment obligations
factoring business profits resulting from the owner’s efforts are
counted twice: once as an asset of goodwill, and again from the earnings
borne from that goodwill.
Is Double Dipping Not Actually a Problem?
Some courts have held that counting an asset for both property division
purposes and determining alimony is not a problem. One court noted that
the community does not actually acquire an interest in business through
property division, and does not have an interest in its profits during
marriage. In a few cases, California courts allowed business profits to
count toward both community property and calculating spousal support without offset.
In Need of Legal Advice? Reach Out to Hanson, Gorian, Bradford & Hanich
Property division issues can be challenging to sort out in divorce cases,
due to sophisticated accounting concepts. If you are going through a divorce
involving high-value assets and investments, you should seek the legal
advice of an experienced attorney from Hanson, Gorian, Bradford &
Hanich. We are determined to guide you the complex legal issues so that
you can base your legal decisions on adequate information.
Call Hanson, Gorian, Bradford & Hanich at (951) 506-6654 or
visit us online to schedule a consultation about your dispute today.