What Is the Danger of Double-Dipping?
Ignoring the dangers of double-dipping marital assets stands out as a clear and present danger to the financial well-being of clients paying permanent spousal support. Double-dipping occurs when an asset is counted twice in a divorce once in the property division and again in setting alimony. The economic consequences of double-dipping a pension are especially dramatic when compared with a “real asset,” such as rental property. As a tangible asset, rental property has an intrinsic value. The rents derived from the property do not reduce the value of the property. In all likelihood, the asset will appreciate over time. A pension is significantly different. When in payout status, a pension’s value is depleted over time. The actuarial present value of a pension drops with each payment. A pension annuity, by definition, is a dissipating asset representing a total liquidation of principal and interest and disappears with the last payment.
