A common issue in divorce cases revolves around business interests, often held by one spouse and not the other. Business interests are marital assets, divisible upon divorce. The tricky part is determining what the business is worth and how the owner spouse compensate the non-owners spouse for their interest? The so-called “double-dip” scenario involves whether or not the value of a business, and the excess earnings derived from same, can be considered when valuing a business and when considering spousal support. Some practitioners think this “double dip” – counting the same income twice – is unfair. If a non-owner spouse receives a lump sum for their interest in a business, why should they also receive spousal support based on that same income? It is a very hotly contested issue in many divorce cases, and the Michigan courts have yet to reach a conclusive decision.
It appears, from relevant case law, that the decisions rests solely in the hands of our family court judges. In a recent case, the Court of Appeals upheld the trial court’s decision to “double dip.” The trial court awarded the non-owner spouse one-half the value of the business while also calculating spousal support on the same net income stream used to value the business. The Court of Appeals held that it is within the trial court’s discretion to determine an appropriate basis for a spousal support award. Each case involves different facts, and it is not appropriate to impose a bright line test.