"Double Dipping" Remains the Law in New Jersey
By Strich Law Firm, Aug 14 2017 05:52PM
Courts consider a wide array of factors in awarding alimony and equitably distributing the assets of parties in divorce cases. Often, a question arises about whether an asset should be used to determine alimony or whether it should be subject to equitable distribution—or both. Awarding a portion of an asset from the same source in alimony and in equitable distribution is referred to as “double dipping”. Interestingly, New Jersey law prevents double dipping only when the issue concerns pension or retirement benefits.
The rule preventing “double dipping” originated in the 1982 case of D’Oro v. D’Oro. In this case, the court ruled that a pension cannot be counted as “income” for the purposes of determining alimony if it has already been considered under equitable distribution. The court upheld this rule in the landmark case of Brown v. Brown in 1990. Here, the ex-wife of a retired naval officer claimed to be entitled to an equitable distribution of her ex-husband’s retirement pension. The Mississippi Supreme court rejected the plaintiff’s claim on the grounds that the distribution of such an asset constituted “double dipping”. The court agreed with the logic of D’Oro v. D’Oro, stating that it would be inequitable for the pension to be counted both as a share of equitable distribution and as a cash flow determination for alimony.
The case of Steneken v. Steneken in 2004 raised the issue of whether “double dipping” applied to the distribution of business-related assets. The defendant had appealed a court decision that gave his ex-wife both a share of his business and a monthly alimony based on his salary from the same business. However, the court argued that the present value of a business, based on its past earning, can be considered entirely separate from the earnings it would provide a shareholder in the future. In other words, a business can be both an asset for equitable distribution and a source of income used to determine alimony. The precedent allowing double dipping to occur in non-pension or retirement benefit cases continues to be upheld by New Jersey courts today.
Comments: Numerous courts around the country have since expanded the “double dipping” rule to protect business-related assets from being distributed twice. However, New Jersey courts continue to uphold that the “double dipping” rule applies only to pensions and retirement benefits. Whether or not this statute is unfair to business owners is widely disputed.
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