Jessica Simpson and Kobe Bryant have been in the news recently, both because of their respective prenups. I thought I would take a moment to reflect on the nature of celebrity marriage contracts, and what this can tell us about the marriages of mere mortals.

To recap in case you’ve missed the news, Kobe Bryant’s wife has just filed for divorce, and there’s no prenup. Kobe’s wealth is estimated to be around $150 Million. Assuming the entire fortune was earned during marriage, it’s all community property, meaning Vanessa is entitled to half of it. Moreover, because Kobe continues to earn an income, and because Vanessa will likely gain custody of the children, Bryant could end up paying spousal and child support on top of losing half his net worth. Not to mention the attorney’s fees he’s going to pay.

Jessica Simpson appears to be on the first chapter of a similar story. Her fiancé has apparently backed away from signing a prenup, citing his belief in true love. Like any celebrity, Jessica’s income streams are fairly complex. She is apparently worth approximately $20 Million, and in addition to earning fees for appearances, she continues to earn royalties from her licensing contract with the Camuto Group who bought her clothing brand in 2005. Absent a prenup, Jessica’s income from all of these sources could very well become community property during a marriage. The same, of course, would hold true for her fiancé’s income, assuming he has any.

When celebrities marry, the process is very much like a corporate merger. All of the various income streams need to be charted. The books need to be balanced. The liabilities disclosed. The expectations for future growth must be set, and an exit strategy mapped. Without this process, a split becomes a financial disaster. This is true of course for all marriages, it’s simply more evident with celebrities.

The procedures necessary to create a valid prenup are time consuming, confronting, and tedious. There’s no way around that fact. Nonetheless, celebrities with complex financial structures would be insane to attempt marriage without a prenup, just as a corporation would breach it’s duties to shareholders by merging without a contract.

More important than those obvious considerations, however, is the opportunity that a prenup presents to lay the groundwork for a strong marriage. This is the point that we miss in the gossip columns, and that most people forget when proposing a prenup to a partner.

Premarital agreements require couples to take a very serious look at their expectations for finances and relationship. These expectations say a lot about the marriage, they say a lot about love, and they say a lot about how the couple works through adversity. Celebrities need prenups – that goes without saying. What isn’t said often enough is that they could also use the process to avoid rather than to foreshadow divorce. And the same goes for the rest of us.

The issue of whether marriage rights should be granted equally to everyone is, inexplicably, an on-going debate around the country.  Complicating the conversation is the fact laws are applied differently from state to state, and that federal and state law conflict at various points.  As of the writing of this post, lesbian and gay couples who are legally married under state laws are nonetheless denied federal benefits because of the so-called “Defense of Marriage Act” (DOMA).

For this reason, it is important to understand which rights marriage traditionally confers, and how these rights differ between state law and federal law.  This knowledge can allow both gay and unmarried heterosexual couples to protect their families.

Many gay and lesbian couples attempt to use premarital agreements and estate planning methodologies to overcome some of the federal inequities.   This can be effective to an extent, but the use of wills, powers of attorney, advanced healthcare directives, and cohabitation agreements simply cannot resolve all of the problems created by DOMA.   For instance, these strategies do nothing for lesbian and gay couples who wish to keep their non-citizen spouse or partner in the U.S. and avoid deportation.  The estate planning alternatives are little comfort to a family torn apart my immigration policy.

The following is a highlight of many of the Rights and Responsibilities afforded to California married couples and California Registered Domestic Partners (RDPs)
1. Joint parental rights of children if born during the marriage or RDP
2. Joint adoption
3. Joint Insurance Plans
4. Status as “next-of-kin” for hospital visits and medical decisions
5. Bereavement or sick leave to care for partner or children
6. Right to make a decision about the disposal of loved ones remains
7. Crime victims recovery benefits
8. Standing to sue for wrongful death or for “loss of consortium”
9. Wrongful death benefits for surviving partner and children
10. Welfare and public assistance
11. Domestic violence protection orders
12. Judicial protections and immunity—testimonial privilege in court proceedings
13. Automatic inheritance in the absence of a will (or in the event that a will is invalidated)
14. Filing of joint state income tax returns
15. Testimonial privilege in state court proceedings
16. Spousal protection from property tax increase upon the death of a co-owner spouse

Here is a list of some of the most important Federal Rights & Responsibilities of Marriage, which are denied to same-sex couples because of DOMA.
1. Immigration and residency for spouses from other countries
2. Crime victims recovery benefits
3. Judicial protections and immunity in federal court
4. Joint filing of bankruptcy petitions
5. Spousal veterans benefits
6. Social Security benefits
7. Medicare benefits
8. Joint filing of federal tax returns
9. Income tax deductions, credits, rates exemption and estimates
10. Deferred Compensation for pension and IRAs
11. Estate and gift tax benefits  (there are substantial estate tax benefits to marriage)
12. Medical care for survivors and dependents of certain veterans

Our office regularly advises clients on how to protect themselves and their families, whether or not they decide to marry.  If you have any questions about your rights in the light of DOMA or other federal statues, you should contact a qualified family attorney.  We’re happy to help.

Working with divorce every day, I am very aware of the financial struggles that couples face at the end of marriage.  None of these issues are strawberries and ice cream, but the one area that causes more heads to explode than any other is without a doubt, the area of spousal support.  Spousal support (also called alimony in some States) is the payment that the higher earning spouse typically makes to the lower earning spouse after a separation or divorce.

Rather than go through a lengthy explanation of support law in California, I thought I would dedicate this post to a brief discussion of perspective.  Higher earning spouses always want to know why the heck they have to pay.  So here’s a primer for you.

The historical concept of marriage is that two people come together to form one financial unit.  When that happens, a division of labor is generally efficient.  One person does laundry, the other dishes.  More traditionally, one takes care of children while the other takes care of money.  Or perhaps one plugs away at their small business while the other stops working to manage construction on a house.

Either way, the upshot is that typically, one spouse is advancing their career and saving money while the other is not.  This works just fine so long as the family unit remains intact. Without the rules we have in place for division of community property and payment of spousal support, non-working spouses could be left without anything to live on after divorce.

California wants to protect the non-working spouse so that the welfare system doesn’t have to feed those people.  On the other hand, public policy also detests abuse and does not want to overpay recipient spouses.  For this reason judge’s have quite a lot of discretion to limit support when appropriate.

The point is, California has rules in place that are intended to protect both parties in a marriage. Both sides typically think the rules are unfair when they’re being enforced, but the legislature hasn’t come up with anything better.

If you are concerned about the payment of spousal support in your marriage, the best way to minimize it is to have signed a valid premarital agreement (prenup).  Postmarital agreements can also be effective in this area.  Absent those documents, however,  support is virtually guaranteed when there are disparate incomes.

Is entering a California “registered domestic partnership” the right move for you and your partner?  More and more gay and lesbian couples are finding that the law relating to their relationship is confusing, and potentially very expensive.

Many couples who have been together for years, and who registered as domestic partners, are surprised when they later end their relationship and discover they are subject to the special rules surrounding “community property.”   In other words, they discover that half of their earnings during the domestic partnership are deemed to belong to their partner, and that they may have to pay spousal support (sometimes called alimony).   This is all because California law now extends the same burdens and benefits of marriage to registered domestic partners.

Further complicating matters for lesbian and gay couples is the fact that while some states recognize California domestic partnership, many do not.  This becomes a problem when gay and lesbian couples move out of California and then wish to “divorce” in their new state.  Many are forced to move back to California for the sole purpose of finalizing their divorce.

Gay and lesbian couples in California also face the reality of a complicated and confusing tax filing process.  In California, domestic partners must file their returns as “married.”  Because of the so-called “Defense of Marriage Act,” however, the IRS and federal government refuse to acknowledge either gay marriage, or domestic partnerships for tax purposes.  Thus, gay and lesbian couples must file separate individual returns for federal taxes, and then complete a mock “married” federal return in order to get the proper numbers to then go back and place on their California state returns.  This quickly becomes extremely complicated.

More and more gay and lesbian couples are using Preregistration Property Agreements (“prenups”) to avoid many of these community property and alimony issues later on.  Other couples are choosing to not register at all, and instead are making sure that they have the appropriate documents such as wills, trusts, powers of attorneys and healthcare directives in place to protect themselves and create a quasi-marital relationship.

There is no right answer to how any couple should memorialize their relationship.  Understanding the legal effect of their decisions however, can save time, frustration, and potentially money down the line.

Some couples sign premarital agreements that include terms they know aren’t enforceable.  They do this because they wish to memorialize agreements in writing, whether or not California courts will uphold those agreements.

Other couples care mostly about protecting assets in case of a future breakup, and so enforcement is a top priority.

Either way, couples should consider the three prenup enforcement basics.  First, both parties absolutely must be represented by an attorney (even if one of the parties is an attorney themselves).  The case law has been quite clear on this score: when one party doesn’t know what they’re getting into, the prenup can be overturned.  Don’t risk it.  Get counsel.

Second, give the process time.  You must wait 7 days between delivering the final draft of your agreement to your fiancé, and the signing of that that draft.  Also, it’s best to begin negotiations before the wedding invitations go out.

Third, full disclosure of your financial picture is vital.  When in doubt, over disclose.  Each of you needs to know what you’re getting into if you want your agreement to be fair and enforceable.

What do I mean that you already have a prenuptial agreement (sometimes called a “prenup“)? If you live anywhere in the United States, then you live in a state that has rules about marriage. Those rules dictate how marital property is treated during marriage, and they dictate what happens to that property if the marriage ends. That, my friends, is a prenup: a bundle of rules and agreements about the assets of married couples. So the question is whether you want the rule-bundle California has set up for you, or some other rule-bundle.  A prenup, or premarital agreement, is how you create your own rule-bundle.

How do prenups strengthen marriages? As you have probably heard, most marriages end over disagreements about money or infidelity. We can’t do anything about the infidelity with a prenup because California is a no-fault divorce state, but we can definitely help with the money issues. Most money problems arise from a lack of communication. Couples don’t like to talk about money – it’s uncomfortable. What if he thinks I’m a gold digger? What if she thinks I’m already planning a divorce? Those are normal concerns, but I’m here to tell you – as someone who sees divorce every day – that your chances of staying married are hugely improved if you talk about money and financial expectations before marriage. A prenup is an absolutely vital part of that discussion because a prenup is a document designed to anticipate the most common money problems that couples encounter. It may turn out that you don’t need a prenup, but you owe it to your marriage to at least know what the rules are.

A prenup is not for everyone. Some couples are perfectly happy with the default rules set up by the state. If that’s the case, then great! But you owe it to yourself and your spouse to know what those rules are, and to talk about your expectations before you get married. That’s the kind of communication a good relationship is founded on.