New Ruling Could Change Divorce for Business Owners

A recent ruling by New York’s Appellate Division, Second Department Court could affect divorce cases involving a spouse with a business.

The ruling in Palydowycz v. Palydowycz overturns precedent, now allowing a court to “double-dip” and take the same asset into account twice — once when determining how the couple’s assets should be divided, and again when determining an economically advantaged spouse’s ability to pay alimony.

This case involved a doctor who owned two medical practices and a portion of an ambulatory surgical center. He agreed to a large monthly alimony payment to his ex-wife, but she fought for part of his ownership interest in these businesses. The man argued that because his income from these assets was used to determine how much he could afford to pay her each month, she shouldn’t be able to both receive payments based on the income and at the same time receive some of the assets generating the income.

The appellate court ruled in favor of the woman, finding that the rule against double-dipping applies only to intangible assets such as professional licenses that don’t produce income on their own. These licenses can be used to determine a spouse’s ability to earn income and pay alimony, but are not an asset that can be split in a divorce. It is expected that New York business owners could now be ordered to make much higher alimony payments after a divorce.

Professionals, business owners and others involved in high-asset divorces must often deal with complex issues of valuation, property division and spousal support. The dedicated and experienced divorce attorneys at Jakubowski, Robertson, Maffei, Goldsmith & Tartaglia work with financial experts to pursue optimal outcomes for our clients. We serve clients throughout New York City’s five boroughs.