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The Infamous "Double-Dip"

When a family owned business is valued in a dissolution action, the argument often is made that paying spousal maintenance based on the income that was valued as part of an asset is a "double dip". Such allegations often fail to understand that business experts only value businesses based on excess earnings and consequently deduct a reasonable salary from the gross revenue earned in order to avoid the double dip argument. Spousal maintenance is then based only on the replacement salary, not the total gross business revenue. The result will be the valuation of a business based on excess earnings over and above a reasonable replacement salary. The payment of maintenance, if appropriate, and based on statutory factors, is only composed of the replacement salary. In re The Marriage of Victor K. Cheng v. Julia A. Cheng, Division II, Court of Appeals, No 47397-1-II (November, 2016). 

Authored by Wolfgang R. Anderson, Attorney at Law

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Anderson, Fields, Dermody & McIlwain, Inc., P.S.

Anderson, Fields, Dermody & McIlwain, Inc., P.S.
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