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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.

Call us at 609-924-2900 if you have a possible case or visit our web site at www.strichlaw.com.

Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm PC is in NJ and the comments relate to NJ only. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. and anyone viewing this site.

By Strich Law Firm, Oct 18 2016 03:27PM

After ending a nearly 44 year marriage, the Dual Judgment of Divorce (“JOD”) ordered the parties to resolve all disputes related to the divorce through binding arbitration rather than going back to the Court. In the JOD, the Husband retained the beauty salon business and agreed to pay $650 per week in non-taxable equitable distribution to Wife. There was no provision for a share of the business to Wife if it was sold or for alimony in the event that equitable distribution was no longer payable. When Husband sold the business, he no longer paid equitable distribution monies to the Wife. Wife filed for arbitration to get alimony instead of the former equitable distribution monies. The arbitration award denied the Wife’s request for alimony even though the Plaintiff earned more money throughout most of the marriage. The Arbitrator explained that modification of alimony requires proof of a substantial change in financial circumstances of the parties. The Wife appealed the Arbitrator’s decision, but the Court still found against her, stating, “an increase in support becomes necessary whenever changed circumstances substantially impair the dependent spouse’s ability to maintain the standard of living reflected in the original decree or agreement.” Upon review, the Court found that the Wife failed to show substantial evidence of change of circumstances and rejected her claim of modification.

Comment: The negotiated JOD failed to foresee or provide for the sale of Husband’s business. Based on the limited information available in the Court’s decision, it would have been better to argue that the intent of the agreement was to provide for a share of the business to the Wife as equitable distribution. As such, an argument could be made that it would be inequitable to let the Husband sell the business and keep all the proceeds before Wife got her fair share of the value of the business. Of course, as aforestated, it would have been better to negotiate a more complete JOD.

It is further noted that the spouse is generally entitled to a bigger share of the business in a long term marriage. Businesses owned by one spouse are not generally divided equally, unlike other assets accrued during the marriage.

Call us with questions on your case at 609-924-2900 or visit our web site at www.strichlaw.com.

Disclaimer: Any and all information contained on this site is for informational purposes, and should not be utilized as a substitute for a full, in-person consultation with a lawyer in your State and familiar with your circumstances. Strich Law Firm, P.C. assumes no responsibility for any information contained on this site, and disclaims all liability in respect of such information. In addition, no part of this site shall be deemed to form any contract between Strich Law Firm, P.C. and anyone viewing this site.

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