Divorcing with a Business? Here’s What You Should Know

Divorce is complicated enough—add a business to the mix, and it becomes even more challenging.

Whether you’re the business owner or married to one, understanding how business valuation, income, and support come together is crucial to making smart, fair decisions.

That’s exactly why Scott Levin, California divorce mediator and attorney, sat down with Sara Nanchanatt, a forensic accountant and business valuation expert and founder of S.N. Forensics, LLC. Together, they break down what actually happens when a business is on the table in a divorce—especially when it comes to child and spousal support.

The Double-Dipping Dilemma: Why Business Owners Need to Be Careful

In California divorces, there’s a common financial pitfall called double-dipping. This happens when the same stream of business income is used twice—first to determine the value of the business (for property division), and then again to calculate support payments.

In simple terms: you shouldn’t count the same money twice.

If you’re in the middle of dividing a business during divorce, understanding how business valuation works—and how courts treat income—is essential for getting to a fair outcome.

🎥 Watch the Video: Divorce with a Business — Explained in Under 10 Minutes!

Whether you’re a business owner or divorcing one, this video helps clarify your options and potential pitfalls. If you’re looking to resolve your divorce without a courtroom battle, mediation can provide a smarter, more affordable path—especially when complex assets are involved.

Our Video Explains How Valuation and Income Affect Support

In this conversation, Scott and Sara unpack the key issues that come up when a business is part of a divorce settlement:

• What types of business income are included in support calculations

• How distributions, retained earnings, and salary are treated

• When “double-dipping” becomes a real issue

• How courts determine a reasonable replacement salary for a business owner

• Why agreeing on the value of the business early can make everything smoother

A Simple Example of Double-Dipping

Imagine Ryan owns a business. During the divorce, he and his spouse agree the business is worth $500,000, based on the income it generates. Ryan buys out his spouse’s half, paying her $250,000.

Later, when support is being calculated, the court looks at the income from that same business to determine how much Ryan should pay in spousal support.

But here’s the problem: that income was already used to calculate the value of the business, which Ryan has now bought out. If the court uses it again to set support, Ryan is paying twice for the same money. That’s double-dipping!!!

Now, when calculating spousal support, the court looks at Ryan’s income from the business.

If the court uses all of the business’s profits again to calculate support — the same profits that were already used to value the business — that’s double-dipping.

In essence, Alice gets half the value of the business and ongoing support payments based on the same income that created that value.

The Fair Approach to Divorcing a Business Owner? Don’t Let Business Income Count Twice

To avoid double-dipping, only Ryan’s fair salary (what it would cost to replace him) should be used to calculate support — not all of the business’s profits, which were already accounted for in the business valuation.

This is why working with a mediator and a valuation expert can be so helpful. When handled properly, these financial decisions don’t have to become battles—they can be addressed clearly, fairly, and without court.

Going through a divorce involving a business in California?
Book a free consultation with Certified Divorce Financial Analyst and Mediator and amicable divorce expert Scott Levin to explore peaceful, cost-effective solutions:
www.sandiegofamilylawyer.net/schedule