“Big Shift Pushed in Custody Disputes” is an April 16, 2015 Wall Street Journal article about the potential for states to change how child custody is determined following a divorce, a one-night encounter in a bar, or anything in between. As noted in realworlddivorce.com (rough draft!), most states operate a system in which a judge attempts to figure out who was at least the 51% parent and then designate that person the “primary parent.” The secondary parent will then become a “visitor” with the children every other weekend for a while but, statistically, eventually will lose touch altogether (e.g., after the victorious parent moves to a different corner of the country). This is considered to be “in the best interest of the children.”
We (co-authors of Real World Divorce) discussed this WSJ article and what seems ultimately most interesting is that America’s money newspaper doesn’t mention money. New York and Wisconsin are mentioned. If the plaintiff and defendant parent in those states each make $200,000 per year and there are two children, the winner gets 25% of the loser’s pre-tax income until the children turn 18 (WI) or 21 (NY). Suppose that there are 15 years to go. The winner will be $1.5 million richer at the end of those 15 years than the loser. Maybe it is a lawsuit about what’s best for the children but the WSJ seems curiously blind to the idea that it could be a lawsuit about the $1.5 million.
The financial implications of a change to the system would be enormous. Right now a plaintiff in New York or Wisconsin may get the full cash value out of children while taking care of them only 60 percent of the time, for example. A reduction in care to 50 percent, on the other hand, assuming the equal $200k/year income scenario above, would mean an after-tax loss of $750,000, equivalent to a pre-tax loss of $1.5 million. In other words, those extra 36 days per year right now are yielding nearly $1400/day in tax-free profit.
Victorious litigants are not the only ones who might want to oppose any changes to the states’ systems. In the current winner-take-all states psychologists would hugely suffer from a rule change due to the loss of opportunities to come into court as expert witnesses, Guardians ad litem, etc. Attorneys dependent on custody lawsuits would obviously suffer a large reduction in revenue (though many of the top attorneys that we interviewed were not eager for this money; they get enough business fighting over alimony and other issues and they feel that children are so grievously harmed by custody litigation and financially motivated custody plaintiffs that they would gladly eliminate the entire litigation-based custody and child support system). Divorce is roughly a $50 billion annual industry. In the European countries where children have limited cash value, it is a tiny fraction of that size per capita. How could the WSJ write about the potential for a dramatic change like this without covering the cash angle?