{"id":12491,"date":"2016-09-21T10:27:26","date_gmt":"2016-09-21T14:27:26","guid":{"rendered":"http:\/\/philip.greenspun.com\/blog\/?p=12491"},"modified":"2016-09-21T10:27:26","modified_gmt":"2016-09-21T14:27:26","slug":"cash-value-of-angelina-jolies-children-roughly-50-million-tax-free","status":"publish","type":"post","link":"https:\/\/philip.greenspun.com\/blog\/2016\/09\/21\/cash-value-of-angelina-jolies-children-roughly-50-million-tax-free\/","title":{"rendered":"Cash value of Angelina Jolie’s children: roughly $50 million tax-free"},"content":{"rendered":"

You’ve perhaps heard that Angelina Jolie has sued Brad Pitt to obtain sole physical custody of six children (petition starting the lawsuit<\/a>) plus a share of money that Pitt earned during the marriage and perhaps before the marriage (“quasi-community assets”). The lawsuit is improperly characterized as primarily seeking a “divorce” due to the fact that California is a no-fault state and Jolie would be guaranteed a divorce per se<\/em>\u00a0simply for showing up to the courthouse and filing a form (no attorney necessary).<\/p>\n

One interesting angle is press coverage noting\u00a0“In her filing, Jolie does not ask for spousal or child support” (CNN\u00a0article specifically titled “What’s at stake”<\/a>)\u00a0despite the fact that the Petition plainly states\u00a0“the court will make orders for the support of the children upon request and submission of financial forms by the requesting party.” Jolie will be entitled to collect child support back-dated at least to when she filed her lawsuit regardless of when in the litigation she gets around to filing the requisite financial forms.<\/span><\/p>\n

Is Jolie likely to win? As noted in the California chapter of Real World Divorce<\/em><\/a>, the jurisdiction has a winner-take-all character and courts generally seek to promote one parent to “primary” (winner) status while the other is demoted to “secondary” (loser) status. Thus it seems reasonable for her to hope that a judge will decide that one parent should dominate (see this chapter<\/a> for whether or not running courts this way is a good idea for kids). Census 2014 data show that 94 percent of Californians collecting child support are women and therefore Jolie could expect a high statistical chance of winning custody simply based on her current gender identification.<\/p>\n

A Massachusetts<\/a> lawyer told us that divorce litigators here refer to children as “little bags of money” due to the fact that each one will generate up to 23 years of tax-free cashflow, potentially in excess of the state’s median family income. What are the six “little bags of money” potentially\u00a0worth to Jolie?<\/p>\n

California’s online calculator kicks out a result of roughly\u00a0$6 million per year, tax-free: the completed\u00a0calculation<\/a>. As the youngest children are (twins) are currently 8 years old, California children stop yielding a return at age 18 (Massachusetts<\/a> is 23; New York<\/a> is 21), and the total cashflow will taper down as the older children age out of the system, Jolie’s quest to become the primary parent is potentially worth roughly $50 million (tax-free). If we take $7 million per movie as Jolie’s likely earnings going forward (this source<\/a>\u00a0says $7-15 million but Jolie is getting older and presumably future contracts are more likely to be at the lower end of the range) and assume a 50 percent marginal tax rate (California state plus federal), she would need to act in 14 movies to earn $50 million after taxes.<\/p>\n

Here are the assumptions:<\/p>\n