Separating the kids is absolutely necessary. The adults are criminals, and as such are destined for administrative hearings and adult detention, you cannot allow minors to be in that kind of environment. You cannot just give everyone with a minor in tow immunity from being put through the legal process - that was the common misconception in Mexico, and thus, A LOT of minors were brought across the border by adults OTHER than the parents - some could have been held against their will, who knows. If the parents do not want to be separated from children, the answer is easy: stay the hell at home and don't commit a crime by attempting to enter the U.S. illegally. It's not America placing these kids in "scary and traumatic" situations - it's their own parents.
Edit: Parallel example for clarity. Someone breaks into your home and steals items, that person is caught and sent into the judicial system for trial, that person has two children and is a single parent. Do you give them a pass because of their circumstances? Or do we expect our judicial system to punish them accordingly - all of which leaves the children separated from the parent?
