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Question: What do you think about the prohibition against "double dipping?"
Answer: "Double dipping" is the notion that one should not use the same asset both for property division and for child and spousal support.
Most typically this concept arises in situations where one party wants to use the income from the same asset for both property division and alimony/support.
This usually comes up in the context either of a defined benefit pension plan or a closely-held business. When the "double-dipping" issue arises, there are always three questions to ask:
1. What does your state's law say about double-dipping in your state?
2. How much does state law dictate what you have to do in this case?
3. Aside from state law, what would you want to do?
We will discuss each of these in turn.
1. What does your state's law say about double-dipping in your state?
In court decisions, statutes or common practice, states differ in how this concept is applied as a matter of law.
Some state law (statutory or case law) prohibits double-dipping. Other state law does not, or is silent.
In any case, it is good to be aware of your state's approach to this question.
2. How much does state law dictate what you have to do in this case?
If you are in a litigation posture, state law will probably dictate your approach to double-dipping in your settlement discussions.
If you are in a collaborative or mediation context, you probably have more latitude to design your own settlement.
3. Aside from state law, what would you want to do?
Speaking strictly from a financial perspective, there is no reason to prohibit double-dipping.
For example, consider two situations:
In the first situation, there is a pension worth $50,000 and bonds worth $50,000.
In the second situation, there is only a pension worth $100,000.
In the first situation, suppose the child support recipient keeps the pension, and the child/spousal support payer keeps the bonds. Each party has $50,000 worth of income-bearing assets from the marital estate. No one would argue that you can not use income from the bonds for child support and spousal support. There is no apparent charge of "double dipping."
Now in the second situation, suppose that the pension is divided 50/50. Each party gets $50,000 worth of income-bearing assets from the marital estate. But in the second situation, the people who prohibit double dipping would prevent you from having the payer using the income from the pension as income for use in calculating child support and spousal support.
But the two situations, financially, are identical. This illustrates why the prohibition against "double dipping," at least in the case of a pension, does not make any sense financially.
Overall, if you are not constrained by state law, we suggest that you look at each situation of possible "double dipping" on its own facts.
We suggest that you first divide the assets. Then, with respect to child and spousal support, look at the anticipated stream of income from the portion of the pension or business asset that is in the possession of the paying party.
Does it seem fair to include this income? We suggest that this should be is your inquiry.
Which is to say that we suggest treating assets which could be "double-dipped" the same as any other asset.