Fathers and Families has helped introduce SB 481, a California bill to curb the common family court practice of issuing “double dipping” spousal support orders.
SB 481 will correct an inequity in California law wherein the same stream of income is counted twice in a family law action — once for purposes of valuing that income stream as a division of property, then again for spousal/partner support purposes when the spouse/partner receives the income in the future. Under this bill, family law courts would have to consider the impact of double counting of income when making a spousal/partner support order.
SB 481 comes on the heels of SB 1482, an alimony reform bill we helped pass last year. SB 1482 allows some alimony obligors to obtain court orders requiring vocational examinations for their exes and mandates that judges follow the exams” findings when determining spousal support levels.
Below is the text of Rod Wright’s SB 481 Fact Sheet:
THIS BILL: Corrects an inequity in California law, known as double dipping, where the same stream of income is counted twice in a family law action — once for purposes of valuing that income stream as a division of property, then again for spousal/partner support purposes when the spouse/partner receives the income in the future. Under this bill, family law courts would have to consider the impact of double counting of income when making a spousal/partner support order.
NEED FOR THE BILL:
Double dipping, or the double counting of income, occurs when divorcing couples have income-producing assets, such as a pension, annuity, or a small family business, which is community property. Such assets are to a great extent valued based on the income which the asset produces or which is expected to be produced in the future. A spouse/partner who wishes to keep the asset must purchase the other party”s share by paying that party one-half of the present value of the future stream of income.
That same stream of income is often counted again for purposes of spousal/partner support. In other words, when the court determines each party”s ability to pay spousal/partner support, it will include the full stream of income which the other party has already purchased from the other party. Many believe that this is an inherently unfair situation which can result in the loss of a small businesses or a retired person being unable to rely on the pension he or she thought was owned free-and-clear of the other party”s claims. Many states, such as New York, have acted to prohibit such double counting.
There is little controlling California law on this topic, but the Supreme Court did approve of the practice, in dicta, in 1979. See In re Marriage of Epstein (1979) 24 Cal.3d 76. Appellate cases have also approved of double counting income in cases involving retirement accounts that were divided. See, e.g., In re Marriage of White (1987) 192 Cal.App.3d 1022. In light of these cases, trial courts” hands are tied with respect to avoiding the inequities of double dipping. This demands a legislative solution.
Double counting is a complex issue with many experts having different opinions as to how best to fix it. This bill would avoid imposing a “one size fits all’ approach. It would express the legislative intent that the inequity created by double dipping should be avoided, and provide discretion to the courts to deal with the issue on a case-by-case basis. This is done by adding a new provision to the 12 circumstances set forth in Family Code section 4320 that courts must consider when setting spousal/partner support:
(n) The extent to which income for support was already capitalized and paid to the other spouse in the division of community property, to avoid double counting the income when the result would be inequitable, based on all of the circumstances presented.