William M. Laufer was our source for New Jersey divorce law and customs. Laufer graduated from the University of Miami School of Law and is licensed in both Florida and New Jersey. He has been doing primarily family law for the past 40 years, but started out with "some personal injury and other plaintiff's work because it was invaluable experience at trying cases. Most family lawyers don't know rules of evidence and how to try a case." Currently Laufer acts as a mediator for about 40 percent of his cases. Laufer is a Fellow in the American Academy of Matrimonial Lawyers (limited to 100 members) and has been named a Super Lawyer by his peers every year since 2005. He has brought about 500 cases to the courthouse steps and tried roughly 250 of those.
Laufer represents female clients about 70 percent of the time. "I have a reputation for being aggressive and women are usually on the offense." Laufer's experience is that in roughly 75 percent of the cases in which he is involved, whether representing a man or a woman, it is the woman who is the plaintiff. This would be consistent with "These Boots are Made for Walking: Why Most Divorce Filers are Women" (Allen and Brinig 2000; American Law and Economics Review) to the extent that New Jersey is a jurisdiction in which women can easily obtain custody and child support that exceeds the cost of rearing a child.
New Jersey law allows a parent to collect child support until a child is "emancipated" and no longer needs support. In practice Laufer says that this is "usually just a four-year college education. If a child misses a semester because of illness then it can be extended another semester. There is no graduate school obligation." The child support guidelines top out at $187,200 of combined net (after-tax) income in New Jersey. "Anything above that, the judges say that they don't apply. I personally think the guidelines are unfair across the board. They don't properly provide the children with the amount of money that they should be receiving. They don't take into account whether the children are living in a high-cost or low-cost area of the state." The child support guidelines no longer apply once a child is in college and child support from parent-to-parent may be adjusted based on college contributions. Laufer notes that, when it comes to being supported through college, "a child of divorce actually has a greater right than a child of marriage."
[Note that the top of the guidelines provides for child support of $29,692 per year when the defendant has $187,200 in annual after-tax income. Laufer's perspective that this is too little is supported by the fact that if the same defendant were sued across the river in New York, the revenue would be a tax-free $55,250 per year (17 percent of the $325,000 in gross income that it would take to have a net income of $187,000). Suing a $187,200 per year after-tax defendant in Massachusetts would yield approximately $50,000 per year in tax-free child support. On the other hand, that $29,692 is seven times the amount that economist Bill Comanor found was the actual cost of a child in a typical American household (see the Methodology chapter) and it is more than three times what the USDA estimates to be the cost of a child in a single-parent home. The child support guidelines allow a plaintiff to collect three times as much for taking care of his or her own child as the state will pay a foster parent to take care of someone else's child ($9,490 per year). That New Jersey parents spend significant sums in legal fees in order to become the winner parent and obtain guideline child support suggests that it exceeds their actual child-related costs.]
When there is a significant income disparity, the person who is ordered to pay child support will also pay substantially all child care expenses as well. Attorney Brian B. Iton wrote a June 7, 2014 article on the subject:
"On top of basic child support both parents have a duty to contribute to the cost of the custodial parent’s work-related childcare expenses.Work-related childcare expenses are not limited to the cost of placing a child in daycare. Work-related childcare can also include: after-school care, care provided prior to school, having a person in your house who cares for the child (e.g., a nanny), care provided during the summer months at a day camp, or other camp."
There is no fixed age in New Jersey at which a court will consider a child's preferences regarding which parent to live with, though Laufer says that 11 or 12 is a typical age at which a court will start to let a child be heard.
Laufer charges $500 per hour and says that the range for "most lawyers in New Jersey" is between $250 and $500 per hour. He estimates that the minimum cost for one side in a custody trial would be $120,000 in legal fees per side plus the cost of expert witnesses (i.e., $300,000+ total). Mediation, on the other hand, can be accomplished for $30,000 including the cost of lawyers for both parties and a mediator.
Asked about prenuptial agreements, Laufer said, "I did two last week. They are alive and well in New Jersey and they are enforced. The ability to enforce a prenup is based on two things: (1) full and complete disclosure, (2) lack of coercion (both should have attorneys that have had opportunity and time to review agreement). They do not have to be fair but people have to understand the nature and extent of parties' assets, income, liabilities. Prenups are enforced unless so egregious that one party would be left as ward of state. The agreement can exclude assets from both before and during the marriage."
As in other states, a prenuptial agreement cannot limit a court's ability to award custody or child support.
The average hourly wage in New Jersey is $25 per hour. A person who goes to college at the Rutgers will spend approximately $115,680 over four years to earn a bachelor's degree. Census 2014 data show that the median income for a 22-36-year-old college-educated woman working full time is $43,000 per year ($33,444 after taxes). The corresponding man earns $53,000 ($39,644 after taxes).
New Jersey is the third least efficient state in the U.S., collecting 12.2 percent of residents' income in order to run state and local government (source: Tax Foundation). Despite the high revenues, New Jersey has at least a $50 billion public employee pension funding shortfall (as a percentage of predicted obligations, worse than California's pension gap) and has received a negative outlook from bond rating agencies. High earners should be aware that the state imposes a 9 percent income tax and a substantial inheritance tax.
The average annual cost of child care in New Jersey is $11,135 for an infant, $9,098 for a four-year-old, and $5636 for a school-age child. Thus the total cost of child care from age 0 through 12 is $61,400.
For the calculations below we assume that a plaintiff can collect child support until a child turns 22, though as noted above the amounts paid after the child enters college may be adjusted and an adult plaintiff's child support entitlement may extend beyond a child's turning 22 if the child has not graduated from college by then.
The male college graduate will have an after-tax spending power of $597,912 after 18 years of working (18 years of income minus taxes and the cost of college). After adjusting for USDA-estimated child-related costs, he would enjoy a higher personal spending power by collecting child support when that support is $3,015 per month or more. This is above the $2,474/month at the top of the guidelines chart. With two children from two different mothers, however, he could have an after-tax spending power larger than from going to college and work if each mother paid $1750 per month, the guideline payment corresponding to after-tax earnings of $139,360 per year.
The female college graduate will have an after-tax spending power of $486,312 over the same time period. She would be better off collecting child support when it exceeds $2,592 per month. This is a slightly-above-guidelines number that would require judicial discretion to obtain. If she is suing two fathers, however, she comes out ahead compared to the college/work scenario when she collects $1,675 from each defendant. Each father must have an after-tax income of at least $131,040 per year.
A 35-year-old female hand surgeon earning $325,000 per year marries a 33-year-old photographer. She sets up her husband with a photo studio and $100,000 of equipment, but he works just a few hours per week. They have a one-year-old child who is cared for by a nanny. The father is often home with the baby and nanny, but he spends most of his at-home time watching TV and surfing the Internet, leaving the child-rearing chores to the nanny. With the mom at work and/or taking care of the baby, the dad begins an affair with a young fashion model. After two years of marriage, the mom sues for divorce, custody, and child support.
"This is a typical case where in my opinion you'd end up with a custody evaluation," says Laufer. "The mother-doctor works full time and basically the nanny has been taking care of the child. The courts would award joint legal custody and sole physical custody to mother. They favor maternal instincts with a 1-year-old. The father would have limited parenting time- no more than one night at a time. For a period there would be no overnights at all, just parenting time during the day. After six months dad should be entitled to take the kid away for an overnight."
How about child support, given that the woman makes $325,000 per year and her ex-husband will earn almost nothing as a photographer? "Income will be imputed to him commensurate with his ability to earn. He will get sent to an employability expert. Such experts are used in many cases and receive a fee of about $2,500. The income estimate by the employability expert will be used to determine his child support obligation. If the father has a college education, he can make at least $50-60,000 per year."
With that kind of imputed income, what will the actual amount of child support be? "He will be contributing roughly $10,000 per year."
Suppose that he doesn't manage to find the $50,000 per year job that the employability expert thinks is out there for him? "They have 'pay or stay' days at the courthouse," explains Laufer. "The probation department will arrest him and bring him to court and he will be brought before judge. Unless he pays the money by the next day he will stay. The courts keep men in jail for a period of time. Eventually they are let out of jail so that they can make money. It is amazing how incarceration makes people come up with money to pay their support obligations."
[See the Massachusetts chapter for our notes on attending a "pay or stay" day in court.]
Can the no-income husband get the high-income wife to pay his legal bills? "If there is no money to divide up, the wife may have to advance part of the retainer for the husband, without prejudice at the end of the case. Judges like to 'level the playing field.' Courts will often create a litigation fund from marital assets and use that fund to pay the lawyers on both sides."
Can the father ask for alimony? No, says Laufer, due to the short term of the marriage.
How about a property division? "The court will need to value his photography business. He will have to pay her back if she bought the equipment with her pre-marital money. The value will be split if the equipment was paid for with earnings during the marriage."
Note that the financial stakes for the mother in keeping sole physical custody are substantial. She will receive roughly $220,000 over 22 years from the father if she keeps custody. If the child, on the other hand, is shared with the father or primarily with the father, she could easily pay $30,000 per year to the father or $660,000 million over 22 years. Thus the difference works out to $880,000 in after-tax cash, which could explain the $300,000 in legal fees expended on a custody fight even if neither parent is feeling sentimental about the child.
A 22-year-old woman marries her 22-year-old college sweetheart. After 14 years of marriage, they have four children, ages 3, 7, 9, 13. Both parents are public school teachers earning approximately $65,000 per year. They have shared child care duties roughly equally over the years. Now they can't stand to be in the same room together. He accuses her of having an affair. She accuses him of being verbally and emotionally abusive to her, but not to the kids. After a stormy argument in the kitchen, he moves in with a friend and she files for divorce, requesting sole custody and child support. The father answers the Complaint by requesting sole custody, but no child support. Both parents agree that the marital assets can be split 50/50. Both parents prefer as little post-divorce contact with the other as possible.
"Despite the conflict," says Laufer, "I predict that they will have joint legal and physical custody but since they can't communicate the court will appoint a parent coordinator. If a time comes when one party is shown to be uncooperative and inflexible then the court could change to sole custody. Courts in New Jersey have the power to force a parent coordinator on the parties."
[Note that a "parent coordinator" is often a psychologist or lawyer who functions as an arbitrator for divorced parents, who pay his or her fees themselves. Decisions by a parenting coordinator can be reviewed by a judge, but generally the idea is to clear day-to-day disputes out of the court and transfer the costs of dispute resolution from the government to the parties themselves.]
Due to the 50/50 parenting time split there would be no child support ordered. Nor would there be alimony in this case or anything other than a 50/50 property division.
What are the financial stakes for a parent attempting to get sole custody? The loser parent would have an after-tax income of approximately $47,000 per year (ADP Paycheck Calculator) and would therefore pay $16,900 in annual child support under the guidelines. One parent would thus be living on approximately $30,000 per year (near the federal poverty guideline for a family of 5) and hosting the full boat of children at least every other weekend while the other had a spending power of close to $70,000 per year.
An 18-year-old woman marries a medical resident. She spends the first four years of the marriage as a college undergraduate, earning a bachelor's degree, and then becomes a stay-at-home mother to two children. She files for divorce after 10 years of marriage. The kids are 5 and 2 years old at the time the divorce commences. The plaintiff does not allege any misdeeds on the part of the father, only that they drifted apart in the time that she aged from 18 to 28. The mother has very obviously been the primary caregiver. The father has now completed his medical training and is earning $275,000 per year. The family has home equity of $300,000 and additional savings of $200,000.
"Custody would be joint legal," says Laufer. "The wife would become the parent of primary residence. Visitation by father would be very liberal, as much as he wants." What might that look like in terms of a concrete schedule? "Every other weekend at a minimum from Friday after school until Sunday after dinner plus one or two nights per week," responded Laufer.
[Note that many states have begun to characterize "sole physical custody" as "parent of primary residence" in an apparent effort to make parents who lose custody feel better about the loss. Legally and practically, however, the implications of losing custody are unchanged.]
"Alimony would be ordered for a 'term' of 8 to 10 years," says Laufer. "In New Jersey we have three types of alimony: rehabilitative, term, and permanent. The amount is according to an unwritten formula. Nine out of ten judges will assign one third of difference between two incomes or, in this case, about $80,000 per year because they will start by imputing a $25,000 or $30,000 per year income to her as primary caretaker. In addition, the wife would receive approximately $3,000 per month in child support."
Laufer concluded that "The biggest issue in this case is the length of the alimony. After that, she would receive only child support."
Confirming Laufer's perspective is that a lobbying group called "The Displaced Homemakers Network of New Jersey" strongly opposes any attempts to limit lifetime alimony awards. In Massachusetts one issue that sparked a change to the alimony law was the general practice of courts ordering alimony lawsuit defendants to work past normal retirement age so that they could continue to pay alimony at the original level. Regarding this issue Cathi Rendfrey, the group's legislative liaison, wrote the following:
The Social Security Act’s retirement age of 65 was passed in 1935. At that time, life expectancy was much shorter than it is now. As of 2011, life expectancy in the U.S. was approximately 79 years. With advances in medicine, it will continue to lengthen. If the life expectancy is so much longer, termination of alimony should not be based on archaic information and rules. After retirement, the recipient not only has the right to maintain a determined lifestyle but still has the need to receive alimony, probably more than ever. Social Security benefits and age should not matter at all.
[Times of Trenton, August 8, 2013]
A New Jersey attorney noted "'Displaced Homemakers' is a great name, but when they go to the Legislature to testify they don't usually point out that overwhelmingly they were the ones who displaced themselves when they sued their husbands."
A 25-year-old woman marries a 40-year-old never-married medical doctor earning $275,000 per year. She had been earning $50,000 per year working as a receptionist in a medical office. She has a child after a year of marriage, quitting her job during the 7th month of pregnancy due to fatigue. She files for divorce when the child is 8 months old (after 1.75 years of marriage), alleging that the father did not participate in the infant's care, e.g., he did not change diapers or get up in the middle of the night to soothe the baby. The mother will allege that the father was verbally demanding and abusive, though there won't be any witnesses to corroborate. The father had savings of $2 million that he accumulated prior to the marriage but there was no significant accumulation of assets during the less-than-two-year marriage. The mother seeks a division of assets as well as alimony.
Child support might be in the neighborhood of $3,000 per month, according to Laufer. In addition, the court would give the plaintiff wife "some rehabilitative alimony for 1.5 years to compensate her for giving up her job. This would be about $80,000 per year."
Due to the short-term nature of the marriage there would be no "equitable distribution" and therefore the father's $2 million in premarital savings would not be divided. (Note, however, that any income from those $2 million in savings would be fed into a child support calculation.)
An 18-year-old woman goes to a music festival and meets a 38-year-old medical doctor earning $275,000 per year. Things get a little crazy and a few months later she calls him up to say "I am going to have a baby." The 18-year-old does not go to college, quits her $12/hour job during the pregnancy, and does not wish to return to work.
"The existence of a marriage has no effect on child support calculation," says Laufer. "Child support by the guidelines should be the same as the previous case, i.e., about $3,000 per month. Maybe an attorney can get more because she's 18 and he's 38 and there is no alimony. The court would have to look at lifestyle. Could get up to $5,000 per month. If she were my client I would be looking at that."
What if the woman were to marry another man who earned $100,000 per year? "Her payments would not be reduced, though there could be an argument about it if she were receiving child support at the $5,000 per month level due to the fact that her shelter costs had come down."
When a custodial parent wants to move with the child to California, how does a judge decide whether or not to approve the move away from the non-custodial parent? "The case in New Jersey that governs removals is Baures v. Neubauer," says Laufer. "There is two-prong test. In order to get before a judge, a parent must show that he or she has a fair and reasonable motive. This may include a job opportunity, remarriage, cost/expense, or family. Once you overcome that hurdle then the court looks at facts as to what is in the best interest of children. How will it affect the other parent? A psychologist must be hired who will come up with a recommendation about what is in the best interest of the children."
"This is the hardest part of my practice. Most removal cases are losers but attorneys take them just to make more money. They are very traumatic and the cost of litigating is double that of a generic custody case."
Is there any rhyme or reason to the standards used in deciding removals? "It is amazing the difference in laws regarding removal among the states," notes Laufer.
Due to the high volatility of financial industry incomes, New Jersey has a correspondingly large number of divorce defendants who go to prison for failure to pay child support or alimony. A Manhattan-based attorney who lives in New Jersey explained "The wife will typically bide her time and sue her husband in a year when she knows that he is going to get a big bonus. She gets child support and alimony based on that. But as soon as there is a down cycle on Wall Street, the guy's income shrinks or maybe he even gets fired. Instead of making $200,000 base and $300,000 bonus the guy would be lucky to find a $60,000 per year job because there are a lot of people making sick money on Wall Street without any identifiable skill. The problem then becomes he owes $125,000 a year in alimony and child support but makes only $60,000. He'll go to court to get his orders modified but the judge, who has never worked on Wall Street, and, in fact, has worked for the government for the last 30 years, will use his discretion find that this guy could easily get a $500,000 a year job a year. So the order is unchanged. The guy goes through his savings, then through his parents' savings, then he goes to prison."
Can this be confirmed with real-world examples? A quick Google search revealed "Jail Becomes Home for Husband Stuck With Lifetime Alimony", an August 27, 2013 Bloomberg story by Sophia Pearson. Here are some excerpts:
[Ari] Schochet, who said he worked as a portfolio manager at Citadel Investment Group Inc. and Fortress Investment Group LLC (FIG) and once earned $1 million a year, has been jailed for missing court-ordered payments at least eight times in the past two years as he coped with the end of his 17-year marriage.
The reason he ran afoul of the law was simple. He was out of work for most of that time, a victim of a weak economy, and he ran through his savings trying to pay his wife alimony and child support that totaled almost $100,000 a year.
Judge Lisa Firko, like other family-law judges, conducts hearings from a makeshift bench while jail employees pass documents between a court-appointed attorney and probation staff.
Since April, he has managed to leave the jail following each appearance after Firko acknowledged his efforts to secure a well-paying job. Schochet now works part-time as an entry-level stock transfer agent, a job that leaves him with about $100 a month in disposable cash after garnisheeing and taxes. He’s got a steady girlfriend and job prospects.
“It’s amazing how small you can live,” said Schochet, whose longest jail stay was 11 days. “I’m down to paying for electricity, water, my cell phone, Internet and gas. Friends help out with whatever else I need.”
All that may be in jeopardy after he faced Firko again yesterday to explain why he was rejected for a court-required $500,000 life insurance policy naming his ex-wife and children as beneficiaries.
“I have been more than patient with you,” the judge told Schochet.
The judge ordered him to surrender to authorities and the head of the work/release program gave him until 6 p.m. yesterday to report to jail, where he will spend his evenings and leave during the day for the next two weeks, when his case will be reviewed by the judge on Sept. 9. His release is conditional on paying $25,000 in arrears.
The life insurance comment above reveals that victorious divorce plaintiffs in New Jersey have superior rights to those who stay married. A spouse may suffer a financial loss when his or her partner dies. A successful plaintiff, on the other hand, can get a judge to order a defendant to pay alimony and child support and life insurance premiums, in any amount, to lock in the financial victory in the event of the defendant's death.
New Jersey assigns different cash values to multiple children of the same parent. The child support calculation formula provides that "net income" will be computed by subtracting "previously ordered child support orders". Thus the first plaintiff gets more under the guidelines than a second plaintiff and a third plaintiff gets still less. Child support plaintiffs have superior rights to a defendant's income than do the legally married spouse and any children of the marriage, even if the wife and kids preceded the plaintiffs.
"1 womb, 2 dads: Judge rules man must only support one twin" (nj.com, May 7, 2015) is about a lawsuit filed by a government attorney, Liana Allen, Esq., and resulting in a 22-page opinion by a government employee (the judge):
The man who was believed to have fathered twin girls in Passaic County actually only fathered one of them, according to a precedent-setting ruling by a Superior Court judge.
Judge Sohail Mohammed ruled that a man identified only as "A.S." was off the hook for child support payments to one of the twins after DNA testing determined he fathered one with 99.9 percent certainty but could not have been the father of the other.
The mother, identified only as "T.M." gave birth to twin girls in January of 2013 and named A.S., a romantic partner, as the father of both kids when applying for public assistance. But after she admitted that she had sex with another, unidentified man within a week of having had sex with A.S., social services ordered a DNA test.
Dr. Karl-Hanz Wurzinger, a DNA expert, testified that the two eggs were fertilized from different fathers during the same menstrual cycle.
"A.S.," who represented himself in court, will pay $28 a week in child support payments to his offspring.
As is typical when low-income men are sued, the father was the only person in the courtroom who was neither an attorney nor represented by an attorney. With the father paying $1,456 per year compared to median government spending per welfare household of $61,192 per year (Congressional Research Service report), the litigation reduced the government's cost of supporting T.M. and the twins by 2.4 percent (assuming that the lawsuit described above was free and also that A.S. won't have to be imprisoned for any future failure to pay the court-ordered amount).
Despite practicing in a state where awarding sole physical custody is the norm, Laufer is personally an advocate for 50/50 parenting and suggests the 2-2-5-5 schedule when mediating divorces. "I have seen it work many times. It works better than every other weekend. If you have good parents it works. When people cooperate enough to mediate they are generally looking for roughly equal time."
Laufer sees a "move afoot in New Jersey" to regulate alimony the way that Massachusetts has done. "Most matrimonial lawyers are opposed to the laws that Massachusetts has passed. I don't think we need a formula. It is a bad idea. The way that it is done now is accurate and fair. If a woman has been married for 10 years she should get a term of alimony."
[Starting in 2012, Massachusetts limited alimony to 60 percent of the length of the marriage for marriages between 5 and 10 years and 70% of the length of the marriage for marriages between 10 and 15 years. Lifetime or permanent alimony was limited to divorces from marriages that lasted at least 20 years. See Massachusetts General Laws Ch. 208, section 49 and also, our Massachusetts chapter in which judges are able to work around this law.]
Laufer sees a fundamental problem with the way that courts try to preserve a divorced person's "lifestyle" by taking money from the ex-spouse. This made a certain amount of sense in the old days when single-income households were the norm and people did not spend every dime that they earned [there were no home equity loans, for example, when our current divorce laws were established]. "Today, two-income couples seem to live a lifestyle based on spending what they both make. If they get divorced they simply can't both maintain the former lifestyle."