To learn about North Carolina law, we interviewed one of Charlotte's most experienced and distinguished practitioners. Alan Krusch has been practicing for more than 30 years and has a background both in family law and financial planning. He teaches other attorneys via continuing legal education seminars and is top-rated by peers, according to Martindale-Hubbell. See http://www.kruschlaw.com/ for a full biography.
Divorces in North Carolina are started by a "plaintiff" against a "defendant" and Krusch says that women are more often plaintiffs than men. "Typically the person who expects custody, and along with that goes money, will file the lawsuit," said Krusch. "I try to help men stay as far away from court as possible," he added, "and I would say the same about women except that court is the only way to force a man to pay."
North Carolina is like Delaware and Pennsylvania in that the technical divorce ("you're not married anymore") is separated from disputes over children and cash that are rolled up into one procedure in most states. "The only thing that you need to get a divorce is to live separately for one year and to have been a resident for six months prior to filing," said Krusch. "All of the other issues, such as custody and finances, are handled outside of the divorce proceeding."
How does the calendaring actually work? "If you separate on January 1 you can file a claim for equitable distribution of property, alimony, custody, and child support on January 2," said Krusch. "This is typically one action but it doesn't have to be. Many times the judge is not going to want to do equitable distribution and custody/child support together. So you might have two separate trials." When would those occur? "It typically takes over a year to go from filing to trial for equitable distribution while custody and child support are ordinarily quicker. Much is driven by who the judge is." Is it the same judge for the entire case, from filing through trial? "That depends on the county."
For people who don't want to share a house and the children through trial, is there a fast-track procedure for getting exclusive use of the house and a primary parenting role? "A domestic violence allegation is the best way to get someone out of the house," said Krusch. "Absent that, it depends on the county. We have a 'divorce from bed and board' statute that implies that you could force somebody out of the house. It requires 'cruel and barbarous acts' to get someone out. Simply being drunk or having affairs should not be enough to qualify as cruel and barbarous but in some counties it would be."
Suppose that the parents separate without anyone alleging domestic violence or cruel and barbarous acts. What happens to the kids in the interim? "Temporary custody varies according to the county," said Krusch. "In Mecklenburg County because of the large population and a shortage of judges, it is difficult to get a temporary custody hearing. The only way that you get it is by alleging an emergency, which is defined as a child subjected to physical harm or being removed from the state with the intention to avoid jurisdiction of North Carolina." Is that the only option? "You can get 'temporary parenting arrangements' from a judge under a local rule. The judge may grant a hearing that is ordinarily 30-60 minutes." Is this evidentiary? "Sometimes," said Krusch. "Witnesses can testify, but it depends on the judge." Will they tend to pick a primary parent at this hearing or divide the children's time 50/50 pending trial? "That all depends on the judge. Some judges are in favor of 50/50 parenting time and others have never and will never order it. There is no statutory presumption of how custody ought to be, either before or after trial." How can that be justice when the outcome, given the same facts, is completely different from judge to judge? "Justice has nothing to do with it," said Krusch. "This is divorce. You couldn't agree so you gave the decision to a stranger to resolve in 15 minutes."
Is North Carolina like other states in that a decision at the temporary order stage regarding custody will tend to become permanent? "Yes," said Krusch. "There is a status quo established by the temporary parenting arrangement. At trial, if it is working, the judge will be reluctant to change it."
North Carolina's judges are elected and litigants are "entitled to a jury trial on bed and board," says Krusch. The "divorce from bed and board" is a sui generis North Carolina concept that is essentially a court order for a legal separation. "You can also get a jury trial on the issue of fault in a trial where alimony is being sought," said Krusch, explaining that "since 1986 fault is simply a factor in a determination of alimony rather than a prerequisite. The dependent spouse cannot get alimony if he or she committed adultery."
Child support in North Carolina terminates at age 18 or upon graduation from high school, with a hard cutoff at age 20. There is no extension for disabled children. Judges can enforce an agreement between parents regarding college expenses but cannot order payment for college otherwise. Krusch says that consumers can reliably calculate child support amounts using state-published guidelines. Day care and health insurance are part of the child support calculation, and end up as supplements to the amounts in the tables, but Krusch notes that the day care must be work-related and only 75 percent is obtainable from the parent who lost custody. "The guidelines assume that the parent receiving child support is also entitled to claim the tax credit for day care," noted Krusch.
The guideline tables cover combined monthly gross (pre-tax) incomes ranging from $1,050 to $25,000 (i.e., from $12,600 per year to $300,000 per year). How do they compare to neighboring South Carolina? For a single child, a poverty-line parent earning $12,600 per year would pay $600 per year in child support in North Carolina and $2,892 in South Carolina. The defendant who earns $250,000 per year sued by a non-working plaintiff would pay $22,368 in North Carolina compared to $18,816 in South Carolina, $13,000 in Nevada, and $40,000 in Massachusetts. This chapter is current as of the guidelines revised August 31, 2015, which made collecting child support in North Carolina more lucrative.
Parents earning less than $999 per month can still be pursued for money either by the co-parents or by the state government, but liability is limited to $50 per month. When parents earn more than $300,000 per year, Krusch says that judges are supposed to "make a determination as to the reasonable needs of the child, rather than rely on the Guidelines." This is how child support was formerly established and how some economists say that it should be established due to the lack of data regarding what high-income parents actually do spend on children. Krusch says that in practice, however, "if a guy earns $400,000 per year a judge might extrapolate from the guidelines." Will the extrapolation proceed ad infinitum to produce the millions of dollars in child support that could be obtained in California, Massachusetts, or Wisconsin? "No," said Krusch. "I had a case recently where the agreement, intended to track what a judge might order, was for $5,000 per month in child support for two children on a 50/50 schedule. The father made $1.5 million per year and the mother was unemployed."
Child support revenue is moderately secure. "You have to show a 'substantial and material change' to get a change in the parenting time schedule," said Krusch. Would a child growing up be a qualifying change? "Growing up from 1 to 6, yes, from 8 to 12 maybe not," said Krusch. A child's preference regarding a schedule can be considered at any age. "I have had a judge deny a 16-year-old's request because she didn't like the way the kid was dressed. I tried a case a few weeks ago where a 17-year-old impressed the judge with her testimony. She expressed good reasons and the judge allowed the teenager to have her way."
Child report recipients are not insulated from financial risk in the event of the co-parent's death. Courts will not order a parent paying child support also to purchase life insurance to secure the obligation ("I've never seen it required even for alimony, though it is often negotiated outside of court," said Krusch). Only child support arrears can be collected from the estate of a dead parent.
Krusch said that, assuming adequate disclosure and representation, two working North Carolinians could enter into a valid prenuptial agreement that kept separate property separate and waived alimony (a "walk-away" agreement).
The average hourly wage in North Carolina is $20.07 per hour. Census 2014 data show that 22-36-year-old college-educated women working full time earn a median income of $37,000 per year ($28,330 after tax). The corresponding man earns $36,000 per year ($27,613 after tax). Attending the NC State for four years will cost $88,300. North Carolina collects 9.8 percent of residents' income to run state and local government, almost exactly the national average of 9.9 percent (source: Tax Foundation). Income tax is a flat 5.75 percent.
The average annual cost of child care is $9,185 for an infant and $7,774 for a four-year-old. The total cost of child care from age 0 through 12 is about $60,981 in commercial settings or $47,816 in a family care setting.
The male college graduate will have an after-tax spending power of $298,282 after 14 years of working (14 years of income minus taxes and the cost of college). After adjusting for USDA-estimated child-related costs, he would enjoy a greater personal spending power by collecting child support when that support is $2,131 per month or more. This is close to the top of the guidelines table and would require suing a mother earning more than $298,800 per year. 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 $1,440 per month, which is possible when each mother makes $171,600 per year.
The female college graduate will have an after-tax spending power of $308,320 over the same time period. She would be better off collecting child support when that exceeds $2,177 per month, slightly over the top of the guidelines ($2,136/month). If she is suing two fathers, however, she is financially better off compared to the college/work case when she can get $1,464 per month from each one. This is possible within the guidelines if each defendant earns at least $177,000 per year.
Among residents surveyed by the U.S. Census Bureau in March 2014, 96 of those collecting child support were women.
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.
Krusch expected shared legal custody in all of our scenarios, including this one. "Sometimes this comes with a designated tie-breaker in which one parent has the final decision-making authority," he noted. How is that functionally different from sole legal custody? "It isn't," responded Krusch. "It is too difficult and expensive for the other parent to go back to court and the hearing will usually be too late to make a difference."
What about the child's schedule? "There is no statutory word for her status," said Krusch, "but the mother will win primary physical custody." Will the child be with the father overnight? "Yes," said Krusch, "but there is no presumed schedule. We make it up as we go along." Will the schedule automatically change as the child gets older? "It depends on the judge as to whether a graduated schedule will be ordered."
Would there be a custody evaluator or Guardian ad litem paid to weigh in on this ordinary custody dispute? "Typically it is just a judge hearing from lay witnesses," said Krusch.
Since the father is not making a profit from his photography business, how is his child support obligation calculated? "Income could be imputed to him if the judge found that he was acting in bad faith by deliberately not working to his capacity," said Krusch. How much would be imputed? "It would depend on his earnings history." But he has been sitting on the sofa ever since he has been able to tap into the doctor's salary. "They can look back before the marriage," Krusch responded. "And, if there is nothing else to go by, judges will impute minimum wage though they're not supposed to do that without some justification."
If $28,490 per in income were imputed to this photographer, the 2012 median pay found by the federal Bureau of Labor Statistics, he would owe the doctor about 10 percent of the top-of-the-guideline $2,136/month number or about $2,500 per year. If the father were to somehow gain custody, he could collect close to $2,136 per month and thus the doctor will have roughly $478,000 more in spending power if she can keep custody of the child through age 18.
What would the financial implications of the mother agreeing to 50/50 custody be? If the number of overnights with the father is 123 per year or more, use of a different worksheet is mandated. The overall cost of the child is presumed to increase 50 percent at the 123rd overnight compared to the 122nd. Then this presumed higher cost is divided between the parents according to the child's schedule. Essentially this means that child support on a 50/50 schedule, when one parent has nearly all of the income, will be 75 percent of the child support in a sole physical custody situation. If the doctor were to agree to let the child spend 182 nights with the father instead of 122, she would give up roughly $42,500 in tax-free payments expected from the father and incur $326,808 in after-tax child support costs, thus making herself $369,308 poorer.
Do these numbers affect the behavior of parents in negotiating a schedule that will be in their child's best interest? Krusch's response was consistent with what we were told by attorneys in other states: "Money is always a factor in every custody negotiation no matter what the parents say. Every overnight that a parent gets over 122 reduces the child support the person would get. It is a big factor in people fighting over how many overnights. That's the reality."
What will this case cost to resolve? Krusch charges $375 per hour in an area where some other attorneys are up to $450 per hour. He estimated that the total fees per side might be $150,000. Can the photographer get a judge to order the doctor to pay his fees? "He can't get fees for the equitable distribution part of the case," said Krusch, "but it becomes discretionary with the judge for alimony, custody, and child support. The criteria are different for each aspect of the case. A dependent spouse entitled to alimony is also entitled to fees. Case law says that if you lose on custody it is abuse of discretion for the judge to grant fees to the loser, but some judges will do it. On child support-related fees, the other parent must have failed to provide support reasonable under the circumstances."
What kind of alimony and property division can the photographer hope to obtain? "He can't get alimony due to the affair," said Krusch, "which is considered 'illicit sexual relations' under our statute. If there had been no affair he might be able to get a year of alimony. There are no statutory limits or guidelines but a rule of thumb in Mecklenburg County is half the length of the marriage." Krusch explained that there is a presumption of dividing marital property 50/50 but "earning potential could be used as a factor in making a different division." What about her pre-marital property? "That's not divisible," responded Krusch. "If she owned real estate and it went up in value because the market went up, that's a passive increase in value and remains separate. Only active appreciation is divisible, which includes payments on a mortgage during the marriage. If her mortgage amount went down $50,000 that becomes $50,000 in marital property.
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.
What if these people both come to court demanding to be made the primary parent, can the judge order 50/50 custody despite neither party asking for it? "Yes," said Krusch, "though it is very judge-specific as to whether or not the conflict will block shared parenting." Does that mean with conflict-sensitive judges there is no chance of a 50/50 schedule in this scenario? "No," said Krusch. "A judge might order parallel parenting with a week-on, week-off schedule and during each week the parent with the children has complete control."
Is there a Georgia-style rural/urban split in terms of how a judge would be likely to rule in this scenario? "Yes," said Krusch. "You're more likely to see sole custody to the mom in a rural county or district and more 50/50 awards in the cities. Judges' attitudes don't change much over time. Their attitude becomes the culture of the county and it becomes how the lawyers think as well. The law can be different from county to county due to interpretation. Appeals courts have allowed trial courts extremely large amounts of discretion." Does that mean appeals are pointless? "They're unlikely to succeed on discretionary matters. As long as a judge can justify what he or she is doing under the statute you're not going to win an appeal," responded Krusch, "but sometimes you've just got to do it. Even if you win at the appeals level you can get the same answer with a different rationale if it is sent back to the trial judge."
Could one of the parents in this scenario, knowing that a divorce is planned, help prepare a sole custody case by taking on more child-related tasks prior to filing the lawsuit? "Although there is no rule requiring it, North Carolina does look at who was the historical primary caregiver," said Krusch, "and therefore it would help to take on more parenting tasks in the year prior. When clients come to me and are behind on child-related duties, I advise them that they aren't ready to separate until they do more of the stuff with the child that the court looks for."
The financial stakes in this custody dispute can be obtained by adding the parents' income ($130,000 per year), finding the number for four children in the chart ($2,468 per month), and then dividing by two because each parent is responsible for half of the total support due to the equal incomes. The winner of a custody lawsuit collects $14,808 per year from the loser, resulting in a difference in spending power of about $444,000 by the time the youngest child ages out of the system.
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.
"Unless there is something wrong with her, the mother gets primary physical custody," was Krusch's analysis of this scenario, "but father would get a considerable amount of time." What would the schedule actually look like? "His weekends would be Friday afternoon to Monday morning," responded Krusch. "If he doesn't work Friday he could get Thursday night as part of his weekend. Plus maybe an overnight or evening during the off week. It really depends upon how the judge sees him as a parent."
What about alimony and child support? "She gets enough support to stay at home for five or six years," said Krusch. Is that to carry her through the youngest child being established in elementary school? "It is based on the length of marriage, not the age of the children."
Note that child support based on the doctor's $275,000 per year in income would be about $35,460 per year. It would fall by 25 percent in a 50/50 custody situation, thus giving the mother a roughly $140,000 incentive to block shared parenting.
Who gets the house? "Remember that somebody had to have moved out to start the divorce," said Krusch. "If Dad moved out then she might get the house, assuming that she can afford the mortgage payments." How about the rest of the property? "Almost no cases are actually 50/50 because of post-separation changes in value and payment of debt that occurs," said Krusch, "but the property division disparity won't be large."
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.
Does North Carolina operate a de facto "tender years" doctrine where this mother is more likely to get sole physical custody of an 8-month-old than she would if the child were 8 years old? "Yes and no," said Krusch. "My experience is that the child is likely to live primarily with mother for a while, but ultimately will be with Father a considerable amount of time." Assuming some interest on the $2 million in savings, the doctor's total income would go above the top of the chart. Further assuming that the child continued to live primarily with the mother and the mother would collect no less than $443,433 over the next 17.3 years.
As noted in Scenario 1, pre-marital savings will not be divided by the court. Therefore the plaintiff's only way to reach the doctor's $2 million is via alimony (short term) and child support from any interest earned.
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.
Krusch predicted that the child would live primarily with the mother and, if that arrangement continued, she would collect roughly $431,784 in child support over 18 years.
Can she wait until the child is 17 years old before asking for support retroactive to the child's birth? "No," said Krusch. "There is a three-year statute of limitations on retroactive support."
If she is not on welfare, must she hire a private attorney to establish paternity and get a child support order against the doctor? "The [state-funded] child support enforcement agency will do it all for her," said Krusch, "albeit not as well as a private attorney would."
The guidelines explicitly cover the situation of the mother marrying a wealthy partner: "Except as otherwise provided, income does not include the income of a person who is not a parent of a child for whom support is being determined regardless of whether that person is married to or lives with the child's parent or has physical custody of the child." In other words, the doctor's payments to her will not be reduced if she marries a billionaire.
"The standard is always best interest of the child if a parent wants to relocate with the child," said Krusch. What's the bottom line, though? "I would tell a mom who is getting remarried to a guy in San Francisco who can't move to North Carolina that she better have a back-up plan because it is not a foregone conclusion that she will be able to move. However, it is very fact-specific and very judge-specific. Some judges are very anti-move, though all are determining four or five criteria set forth by case law. They'll look at the reason for the move, the likelihood that the relocated parent will abide by a court order for visitation, etc."
North Carolina assigns different cash values to different children from the same parent: "Current Child support payments actually made by a parent under any pre-existing court order, separation agreement or voluntary support arrangement are deducted from the parent's gross income." Thus the first person to sue gets the most cash and each subsequent plaintiff gets less.
As in most other states, North Carolina provides financial incentives to have children with multiple co-parents. Assuming that all the co-parents earn the same $25,000 per month in gross income (top of the guideline chart), three children with one co-parent produce $790,128 in tax-free child support revenue over 18 years. Three children with three different co-parents, on the other hand, have a cash value of $1.38 million.
When a self-employed person is sued for child support, North Carolina opens a huge field of litigation regarding what the person's income might be. The guidelines make it clear that it won't be whatever the IRS determined it to be: "In most cases, this amount will differ from a
determination of business income for tax purposes." Attorneys and the judge, none of whom may have any business experience, are supposed to figure out which expenses that the IRS found to be deductible are not "ordinary or necessary" for the operation of the enterprise. Even if everything were found to be ordinary and necessary, the accounting for the cost of each capital asset, such as a machine tool, must be recalculated for the divorce court using different techniques than those favored by the IRS.
Krusch said "It is likely that the legislature will do what they can to make decisions more uniform and try to cut down the number of cases filed that require a lot of court time, such as custody. It may be that the legislature will provide presumptive custody/visitation guidelines for that." What would he like to see changed? "Personally I like to know what I'm looking at so that I am able to give my client more certainty. I would like to see more guidelines, such as presumptive custody and alimony guidelines. I would also like to see increased funding for the court system."
As with Georgia, from a layperson's perspective it is hard to fathom how it can be '"justice" when, given the same facts, a custody decision "in the best interest of the child" will be consistently different in urban versus rural courthouses or from judge to judge. Wouldn't children in at least one of those areas or in front of at least one of those judges necessarily be getting "unjust" treatment? Krusch, like some other attorneys we interviewed, had a more functional definition of justice: "I don't know what justice really means except that it is what a judge says it means."