Cash value of Angelina Jolie’s children: roughly $50 million tax-free

You’ve perhaps heard that Angelina Jolie has sued Brad Pitt to obtain sole physical custody of six children (petition starting the lawsuit) 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 simply for showing up to the courthouse and filing a form (no attorney necessary).

One interesting angle is press coverage noting “In her filing, Jolie does not ask for spousal or child support” (CNN article specifically titled “What’s at stake”) despite the fact that the Petition plainly states “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.

Is Jolie likely to win? As noted in the California chapter of Real World Divorce, 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 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.

A Massachusetts 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 worth to Jolie?

California’s online calculator kicks out a result of roughly $6 million per year, tax-free: the completed calculation. As the youngest children are (twins) are currently 8 years old, California children stop yielding a return at age 18 (Massachusetts is 23; New York 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 says $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.

Here are the assumptions:

  • the defendant’s net worth at $350 million and the plaintiff’s at $275 million (source: Journal of Popular Studies)
  • a 5 percent income from investments, either real or imputed by the judge, resulting in $1.46 million of “interest received” for Pitt and $1.15 million per month for Jolie
  • earned income for Pitt of $31.5 million per year (Forbes) and $15 million per year for Jolie (tougher to find an authoritative estimate; I used this source)
  • six children
  • the children spend 20 percent of their time with the loser parent (this is the form default)

[What would “justice” look like in a different jurisdiction? Simply by showing up in court and identifying as a woman Jolie would automatically win primary custody in Denmark or Germany, but her revenue would be limited to $8,000 per child per year, i.e., $48,000 per year instead of $6 million per year. In neighboring Nevada Jolie’s child-related revenue would be capped at less than $13,000 per year per child and, as of October 1, 2015, state law favors 50/50 parenting (see “New Nevada Custody Laws Going Into Effect on October 1, 2015”). Thus Pitt could have saved himself a considerable amount of heartache over losing the kids, legal fees (a divorce litigator I met at the Reno Air Races charges a fixed $3500 to handle a divorce plus an additional $6000 if the case goes to trial), and financial exposure if he had insisted on establishing a primary residence in Tahoe or Las Vegas and Gulfstreaming into Hollywood as necessary.]

Notes:

  • the California child support guidelines are presumed to apply but judges can deviate from the guidelines if they can find reasons for doing so
  • Jolie’s lawsuit is being handled by Laura Wasser, who was in the news recently for defending Johnny Depp from Amber Heard (Bloomberg says that the unmarried Wasser has out-of-wedlock children with multiple fathers and is thus able to collect child support at California rates but can shield her own earnings from a potential alimony claim)

5 Comments

  1. George A.

    September 21, 2016 @ 1:05 pm

    1

    For a minute, let us ignore the $$ factor in a divorce and let me ask if anyone can help me understand this.

    In states that have a “no-fault” divorce, how could any party ask for a “sole physical custody” of the children and the judge grants it? Shouldn’t this be 50/50 unless if it is proven the children will be in harm’s way with the other party?

    Let me bring back the $$ factor: why would a “no-fault” divorce forces the breadmaker to be the source of the income supporting the children and the other party? Why isn’t everything 50/50?

    I sense a lot of issues with the “no-fault” divorce cases, and wonder why it has not been taken to the Supreme Court.

  2. philg

    September 21, 2016 @ 1:17 pm

    2

    George: States generally say that they decide child custody in a strict “best interest of the child” standard. Some states have a divorce industry, which includes the judges and legislature, where it is nearly always in a child’s best interest to have a primary parent if the parents never lived together or no longer live together. Thus regardless of the amount of litigation and money spent the answer is nearly always the same: every other weekend with the secondary/loser parent. Across a state line it may be the case that the divorce industry thinks that it is nearly always in a child’s best interest to have roughly equal access to both parents and therefore a 50/50 schedule will be ordered. Look at the Maryland and Pennsylvania chapters for how the answer to “best interest” will be different even though the statutes are not substantially different.

    So it makes logical sense as long as you accept the idea that the “best interest” of a child determination will be completely different if the child had lived a few hundred feet away into a different jurisdiction (see the Georgia chapter for how it will be a different answer in Atlanta versus a short drive into the countryside).

    Then once the child is parked with the primary/winner parent it will be in the child’s best interest to have the winner parent be stuffed full of cash from the loser parent. Despite research showing that the extraction of the cash from the loser parent via a court order will result in a worse psychological outcome for the child as well as reduced non-cash inputs from the loser parent, nothing stops the divorce industry in a particular state from deciding that the material wealth of the winner parent is more important to the children than anything else.

  3. Jack

    September 21, 2016 @ 4:33 pm

    3

    The issue of whether a state requires “grounds” for divorce and who gets custody of the children are two separate issues. Modern domestic relations law requires the court to determine what arrangement is “in the best interests” of the child. What that means as a practical matter is that the matter is handed over to “experts,” mental health professionals, who will opine as to what arrangement is in the best interests of the child. Metal health is not exactly a hard science so again as a practical matter, unless the mother is a prostitute, drug user, alcoholic or mentally ill she will typically be given some sort of legal custody over the child. The father will typically then be given “visitation rights,” the right to spend set periods of time with the child. The funding for the mother’s raising of the child will typically be provided in large part by the father — notwithstanding that his parental rights over his child will be severely limited. Given this lopsided arrangement, men will often chose to disappear from their family. See deadbeat dads.

    Interestingly Jolie wants primary custody of all six children, not just three or four of five. Obviously she wants to punish her husband for his alleged infidelity. Though she has graciously offered their father some sort of “visitation privileges.” The next shoe that often drops in these situations are allegations that the father is abusive or has sexual issues. This tactic may enable the mother to further restrict the father’s time with his children by perhaps requiring that a mental health “professional” be present while the father is with his children. This will likely turn out quite badly for Brad Pitt — as it does for most men who go through a divorce that involves children.

  4. Smartest Woman on the Internet

    September 21, 2016 @ 6:34 pm

    4

    Three of the children are international adoptees – Cambodia, Ethiopia, and Vietnam – and Jolie adopted two of them before getting romantically involved w/ Pitt in ’06 and eventually marrying Pitt in ’14. Jolie and Pitt had their first biological child together in ’06 followed by twins in ’08.

    Oh, and this will be Jolie’s third divorce by the age of 41.

  5. mike

    October 3, 2016 @ 10:40 pm

    5

    “Let us be clear, the removal of fathers from the lives of their children is … public … policy“. -Robert Franklin ICMI-14

    “Men’s rights activists must wake up and realize that the time for trying to counter the hypocrisy with rationality – with essentially male arguments, using facts and truth, in the hope that sense will prevail – is not going to make any difference to the relentless feminist long march on men” -Herbert Purdy ICMI-16

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