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For Business Owners Going Through Divorce, Avoiding a Double Dip Is Essential

Going through a divorce involves many legal aspects. One major issue that comes into play involves the employment and assets of the two people who are getting divorced. In many situations, a person who is divorcing owns a private business, and when that is the case, it is imperative that something called a "double dip" be avoided.

Double Dip Defined

As the phrase implies, a double dip occurs in a divorce when the value of a business is counted two times. That is, it is counted once as a source of income, which literally factors into the equation when deciding spousal support, and another time when determining the division of property.

Decreasing the Chance of Double Dipping

Because double dipping is to be avoided, it is important to learn and implement strategies that can help to reduce the chances of it happening. One key area of focus is the issue of business valuation. Certain types of business valuation -- or calculating the value of the business -- minimize the risk of a double dip happening. These include an asset approach, income approach, discounted cash flows, capitalization of earnings, and market approach. These methods of valuation focus on such aspects as the business components and its cash flow. This makes them less likely to fall into being called double dipping, so they are more recommended as business valuation methods.

Dealing with a divorce and going through all the steps it entails is one of the most complex and stressful experiences a person ever goes through. It is thus important to work with a family law attorney who can help to avoid costly mistakes related to dividing assets. A reputable family law attorney can help to guide the process and avoid mistakes such as double dipping.

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