Double Dipping: How Business Valuations Impact Maintenance in Divorce | Episode 232

The Double Dip in Colorado Divorce: Business Valuation and SupportIn this episode of Divorce at Altitude, Ryan Kalamaya and Amy Goscha tackle a technical but important issue in Colorado divorce law: the “double dip.” The discussion focuses on what happens when a business owner’s future earnings are used both to value a business for property division and again to calculate support, such as child support or spousal maintenance.Ryan and Amy explain that Colorado includes personal goodwill in business valuations, which can create tension when those same earnings are later counted as income for support. They walk through the difference between personal goodwill and enterprise goodwill, how business valuation experts use the excess earnings method, and why Colorado’s current case law can produce outcomes that feel unfair to the business-owning spouse.Episode HighlightsWhat the “Double Dip” MeansThe “double dip” happens when the same stream of earnings is counted twice: first in valuing a business for property division, and again when calculating support.Personal Goodwill vs. Enterprise GoodwillA central part of the episode is the distinction between personal goodwill and enterprise goodwill. Personal goodwill is tied to the owner’s reputation, relationships, and skills.Why Colorado Stands OutRyan notes that Colorado is in the minority of states that include personal goodwill as a divisible marital asset. Other states either exclude it entirely or take a more complicated approach.How the Excess Earnings Method WorksAmy and Ryan explain that business valuation experts often use the excess earnings method to value personal goodwill. The expert determines what a “normal” professional in that field would earn, compares it to what the owner actually earns, and capitalizes the difference to produce a goodwill value.Why Future Earnings Are at the Center of the ProblemThe concern with the excess earnings method is that it effectively values future earnings. If those future earnings are then also used as income for child support or spousal maintenance, the business owner may feel like the same dollars are being counted twice.What is Divorce at Altitude? Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado. To subscribe to Divorce at Altitude, click here and select your favorite podcast player. To subscribe to Kalamaya | Goscha's YouTube channel where many of the episodes will be posted as videos, click here.  If you have additional questions or would like to speak to one of our attorneys, give us a call at 970-429-5784 or email us at [email protected].************************************************************************DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.