Can We All Divorce Like Rupert and Wendi Murdoch?
How much will Rupert Murdoch, the billionaire chairman of News Corp., and Wendi Deng have to pay for their divorce? A significant sum, no doubt, but chances are pretty good that they’ll be able to weather the financial storm.
Many divorcing spouses have a tougher time of it. Those amicable enough to use mediators, collaborative lawyers or even do-it-yourself forms can dissolve their marriages for no more than a few thousand dollars. But when terms are contested, bills in the U.S. typically run $15,000 to $35,000.
The high costs of figuring out a financial settlement were emphasized in a new analysis by a New York state commission on divorce policy. Not surprisingly, the commission found that squabbling over spousal support, in particular, increases the cost of divorce. Because judges handle awards inconsistently and unpredictably, divorcing couples are easily frustrated and discouraged from settling, further driving up legal expenses.
So what can be done? One idea is to establish a consistent formula for spousal support -- at least for couples in fairly ordinary financial circumstances. A few states have adopted such formulas for the temporary assistance that is often put in place while a divorce is in progress. A bill before the New York Legislature would make the state the first to apply a formula to post-divorce alimony.
Standardization has helped reform divorce before. Beginning in the 1980s, all 50 states reduced litigation by creating a basic structure for child-support payments.
The formula proposed in New York ensures that a spouse pays alimony only if he or she is a much higher earner. It takes into account the difference between the two spouses’ incomes and ensures that the payee doesn’t end up earning more (or even as much as) the payer.
A formula can enable low-income spouses to win awards they could not have afforded to litigate. It doesn’t work so well, however, for affluent couples with complicated sources of income. In such cases, the equation can lead to a payment level that seems unfair to one of the spouses, who ends up pursuing even more litigation to seek an exemption from it. For this reason, it’s worth putting in place caps under which the formula is applied -- something that has been done with child-support.
Formulas that tie the duration of alimony to the duration of the marriage -- an approach Massachusetts adopted in 2011 -- are worth considering, too.
The New York bill is a smart step that we hope will inspire other states to adopt standard, predictable alimony calculations. In all such formulas for divorce, judges need the authority to deviate in specific cases, according to a list of factors that vary by state. Having a formula to start with, though, could help make an uneasy process a little less expensive.
To contact the Bloomberg View editorial board: firstname.lastname@example.org.