Grunfeld v. Grunfeld Revisited

Five years later, in Grunfeld v. Grunfeld, 94 NY2d 696 (2000), the Court of Appeals expanded on this 'double-dipping' theme, stating that '[o]nce a court converts a specific stream of income into an asset, that income may no longer be calculated into the maintenance formula and payout' [citations omitted]. While Grunfeld dealt specifically with whether the husband's license income was being double counted in the determination of the wife's maintenance award, it also involved a capitalization of the value of the husband's law practice, which was distributed as a marital asset. The excess earnings ' that is, the husband's earnings in excess of reasonable compensation ' used in the valuation of the husband's law practice were not used in determining the wife's maintenance award, since that would have violated the double counting proscribed by McSparron. (Subsequent appellate division cases have similarly applied the double-counting principle to businesses that are valued and distributed in divorce actions. See e.g. Murphy v.Murphy, 6 AD3d 678 (2^nd Dept. 2004); Sodaro v. Sodaro, 286 AD2d 434, (2^nd Dept. 2001); Douglas v. Douglas, 281 AD2d 709 (3^rd Dept. 2001). Practitioners should consider, however, that to the extent a spouse does not receive a 50% distribution of a license or business, earnings deriving from the undistributed value would be available in the consideration of a maintenance award.)