Giving Men An Equal Voice In Divorce

What is double-dipping when a business owner divorces?

On Behalf of | May 22, 2024 | Divorce

Someone who is running a business has a lot of matters that demand their attention. In some cases, the demands of business management and ownership can put strain on a marriage. Some people end up getting divorced because they cannot give their spouses and children the time they require.

Other times, business owners find themselves facing divorce for reasons completely unrelated to their careers. Regardless of the underlying cause of an upcoming divorce in Florida, a business owner may need to address more concerns than the average spouse preparing for divorce proceedings.

The company that they own and operate could be at risk during the divorce. Even if someone negotiates an arrangement in which they can protect their company from dissolution or sale, they may still have reason to worry about other financial setbacks related to their business ownership. Double dipping during financial negotiations can be a serious concern for someone who owns and runs a business.

What constitutes double dipping?

In the context of a Florida divorce, double dipping involves someone essentially claiming business income twice when negotiating a financial settlement. They do that by counting the business as a marital asset and then also requesting alimony based on the future income the business might generate. This puts the business owner at a disadvantage in many cases.

Many business valuation models already factor in the earning potential of the organization. It is an unfair burden to have to account for that income twice when making financial arrangements with a spouse during a divorce.

Both the valuation model that someone uses when determining what the company they own is worth and the unique economic circumstances of the spouses can influence whether double dipping is a serious concern in a pending divorce. Business owners may need to counter property division or alimony proposals if they are unfair.

Thankfully, those who understand that their spouse might try to claim the value of a business more than once to receive more than an equitable share of their marital estate can use that information when evaluating property division proposals or when presenting their case to a judge during a litigated divorce in family court.