A problem occurs if the spousal maintenance is awarded and the business is valued based on total salary including the excess portion the receiving spouse will receive. A property settlement occurs in a situation involving an amount less than his or her share of the fair market value of the closely held business. While spousal maintenance will be larger since it is based on total salary, it will take many years to equalize or catch up for the decreased property settlement.
Factoring in Goodwill
Goodwill may also complicate the double dip issue. Any share of the total value of the closely held business that pertains to the personal effect, charisma, reputation, etc. of the owner’s spouse will be deducted from the total value and awarded to him or her as separate property. As a result, the amount of goodwill is neither divisible nor included in the community estate. Accordingly, this decreases the amount awarded to the non-owner spouse as property settlement, and his or her return investment will be less, resulting in a greater amount of spousal maintenance. Ultimately, the court may be forced to award spousal maintenance based on total income of the non-owner’s spouse, not just the fair market salary revisiting the double dip issue.
If this is a problem that you are facing in a pending or potential divorce, contact Simon Law Group at 480-745-2450 or email [email protected]. We will put you in touch with an expert Phoenix divorce lawyer who understands all the interrelationships and ramifications of double dipping as it applies to closely held businesses and potential awards of spousal maintenance.
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