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Prenups aren't just for celebrities

When the media reports a celebrity couple has split up, such as Kim Kardashian and Kris Humphries, or Demi Moore and Ashton Kutcher, there is inevitably a flurry of speculation regarding whether there was a prenup in place, or if someone is going to lose a good chunk of their wealth. A prenuptial agreement is a legally binding contract that stipulates how a married couple's assets will be split up if the marriage fails. Prenups may not be for everybody, for example if you make $70,000 a year and don't own a home, it might not be worth your time to pen out a prenup. However, if you are affluent, have family money, or are an entrepreneur who is building a business that you expect to be successful one day, it is wise to consider negotiating a prenup with your future spouse.

Prenups have been on the rise in recent years, not surprisingly, considering the state of the economy and the financial crisis. People are anxious to protect what they have left, and they are concerned about debt their spouse is carrying, coming into a marriage! California is a "community property" state, which means that typically the divisions of the marital assets in a divorce are split 50/50, unless you have a prenuptial agreement. A prenup allows you to override state laws, as long as it is properly executed.

There are some key tips to ensure that your prenup is "properly executed". Generally, attorneys recommend that a prenup be signed at least 30 days before the marriage, to avoid the appearance of coercion. In addition, it's very important that each spouse be represented by their own attorney. From a legal perspective, it's an inherent conflict of interest for one lawyer to represent both parties in a negotiation like this, because how can they have both spouses' best interest in mind?

Marital assets that get divided generally include all income and property acquired during the marriage by either spouse. This includes: salary and bonuses that were deposited in bank accounts, real estate, business income, and benefits accrued in a 401(k) plan, pension, or IRA account. Though your retirement account may be in your name, in belongs to both you and your spouse.

Many people are concerned that a prenup kills the romance of their impending marriage, which is totally understandable since nobody wants to talk about divorce and who gets what when you are planning a wedding! However, when handled correctly, a prenuptial agreement offers an opportunity to discuss important financial issues, hopefully in a non-emotional sort of way, which can determine the financial constitution for the rest of your marriage. And, when it is a voluntary discussion, it is much more likely that it will be a positive discussion, rather than a negative one. A heart-to-heart financial discussion might be difficult to have, but no marriage is immune from financial decisions, and it sets the tone for future dialogue, so we recommend having those tough discussions up front! Our attorneys are highly experienced in negotiating prenuptial agreements, so please call us if you have any questions.

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