In a recent decision, the Connecticut Supreme Court clarified this jurisdiction's approach to double counting (or double dipping). The court acknowledged that it had never been asked to determine whether the rule against double counting applied where the case involved the distribution of the value of the owner’s business and the consideration of income from that business to determine alimony.

Value vs. ownership: The husband owned two closely held businesses that were the sole source of his gross annual income. The trial court credited the testimony of the wife’s valuation expert and found that the combined value of the two businesses was $904,000. Based on this finding, in turn, the court awarded the wife a permanent nonmodifiable alimony of $18,000 per month. Additionally, the trial court awarded the wife the sum of $452,000, representing her half of the value of the businesses.

The husband successfully appealed the ruling with the state appellate court, which found the trial court improperly double counted the husband’s income by permitting it to be considered for purposes of the division of property and then again for the determination of alimony.

In asking for review by the state Supreme Court, the wife argued that the appellate court had misapplied the double-counting test by treating the allocation of a portion of the business value to the wife as the equivalent of transferring an interest in the business. Here, the trial court awarded 100% of the ownership of the businesses to the husband, which meant he had an income stream from which to make the alimony payments that was separate from the lump-sum payment the plaintiff received as part of the property distribution.

The state Supreme Court agreed with the wife. The court explained that the issue of double counting has arisen in the context of pensions and retirement. The court noted that, while no case law says so specifically, the court itself has suggested it would be double counting if income from property that was awarded to the nonpaying spouse and, therefore, was no longer available to the paying spouse, would be awarded to the nonpaying spouse in the form of an alimony award.

But the high court had never “clearly extended our case law regarding double counting to the valuation of businesses.” The court said case law from other jurisdictions suggested “it is not double counting for a trial court to award a spouse a lump sum representing a portion of the value of a business and also awarding the spouse alimony that is based on the paying spouse’s actual income from that business.”

Here, the trial court did not improperly double count the value of the [husband’s] businesses “because any rule against double counting does not apply when the distributed asset is the value of a business and the alimony is based on income earned from that business.”

A digest of Oudheusden v. Oudheusden (II), 2021 Conn. LEXIS 111 (April 27, 2021), as well as the court’s opinion will be available soon at BVLaw. A digest of the appellate court ruling, Oudheusden v. Oudheusden, 209 A.3d 1282 (2019), and that court’s opinion are available to BVLaw subscribers.