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Income of Business as Income for Support
© 2004 National Legal Research Group, Inc.
NEW YORK: Murphy v. Murphy, 6 A.D.3d 678, 775 N.Y.S.2d 370 (2004).
The trial court erred in basing an award of maintenance upon income which was also used for the purpose of valuing the husband's business. It was not error, however, to base an award of child support upon the same income.
In a decision reversing in part the order of the trial court, the appellate division discussed the delicate relationship of an equitable distribution of marital assets and an award of maintenance to the dependent spouse.
Upon the granting of divorce, the trial court awarded the wife a distributive share of the marital estate and also granted her maintenance. The husband appealed on the basis that the trial court impermissibly engaged in the "double counting" of income in valuing his business, which was equitably distributed as marital property, and in determining the amount of spousal maintenance. The appellate court agreed. The valuation of the husband's business involved calculating his projected future excess earnings. Thus, stated the court, in valuing and distributing the value of the defendant's business, the trial court converted a certain amount of the husband's projected future income stream into an asset. However, it also calculated the amount of maintenance to which the wife was entitled based on the husband's total income, which must have included the excess earnings produced by his business. This was held to be improper. Once a court converts a specific stream of income into an asset, that asset may no longer be calculated into the maintenance formula and payout. The appellate division remanded the matter to the trial court to recalculate the cash distribution award and maintenance award as that court possessed discretion in the manner in which to avoid such double counting. Note that the court did reject the husband's contention that the amount of his child support obligation must be recalculated due to the distribution of his future earnings in the equitable distribution, relying upon previous authority that found no merit to the contention as to the applicability of the double-counting rule to child support.
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