Many celebrity couples who reside and get married in CA seek prenups for this reason. They believe that they should have the right to agree on how their property should be handled. The problem with prenups is that they are not very effective.
Boston, MA (PRWEB) April 24, 2014
In late March, a relatively unknown term used by relationship counselors appeared in a popular email newsletter and a website dedicated to healthy living. In just a few urbane paragraphs, acclaimed actress Gwyneth Paltrow announced to her followers that the end of her marriage was near. According to CNN, Paltrow explained that she was “consciously uncoupling” from husband and musician Chris Martin of Coldplay fame (1).
Most readers were initially perplexed by Paltrow's writing. Some claimed that “conscious uncoupling” is pure euphemism for what many statutes refer to as dissolution of marriage, but it turns out that the term has no relation to what actually goes on in family court when spouses chose to terminate their civil unions. The Voice of America (2) describes it as a preamble to separation, but not even legal separation.
In states such as California, where the couple resides according to the LA Times (3), the civil system allows three procedures to terminate a marriage (4), and none of them mention conscious uncoupling. “It sounds very civilized, but it does not invoke the potential situations that many celebrity couples face in court when they get divorced,” explains Rocco Beatrice of UltraTrust.com. As the Managing Director of Estate Street Partners, a CPA firm specializing on irrevocable trusts, asset protection and estate planning.
Mr. Beatrice continued: “When it comes to division of property in high net worth divorce cases, civility often yields to legal strategy and things tend to get complicated. Paltrow and Martin are both major earners; as a couple, they are certainly in the high net worth category.” Mr. Beatrice is referring to the various media reports on the net worth of this fabulous couple. As reported by LA Times (3), the value of their combined assets could easily surpass $250 million.
Although both Paltrow and Martin have certainly created a considerable amount of wealth (3) since they got married in 2003, it is important to remember that they had already achieved substantial success when they met. “Whatever they brought to the marriage is perfunctorily considered separate property, and any earnings after the wedding become marital assets in the absence of an effective premarital instrument to determine what should rightfully and separately belong to husband and wife,” explains Mr. Beatrice.
There has been wide speculation according to The Conversation, an academic journal of Durham University in England, about the existence of a prenuptial agreement between Paltrow and Martin. The Conversation discussed this possibility due to higher awareness among high net worth couples who are concerned about how their assets will be split in family court (5).
“California is a community property state,” explains Mr. Beatrice, “many celebrity couples who reside and get married in California will seek prenuptial agreements for this reason. They believe that they should have the right to agree on how their property should be handled as a married couple. The problem with prenups is that they are not very effective.”
“With Paltrow and Martin, we see a significant accumulation of real estate and a certain amount of asset management.” Mr. Beatrice is referring to several properties reported by real estate information websites Business Standard Magazine (6) and Zillow (7), which have been reportedly acquired by the couple under legal entities such as Magical Kingdom Land Trust and Orchard House, LLC.
Mr. Beatrice continued: “We can see that the couple is taking good advantage of limited liability companies (LLCs), which provide financial, tax and asset protection benefits. We often work with clients who choose LLC structures as wealth protection instruments. We can also see that Paltrow and Martin are establishing trusts when they acquire properties in some cases, and we hope that they are irrevocable trusts.”
“So we know that they have acquired choice properties in Brentwood, Malibu and Santa Monica as well as in the East Hamptons in New York; these purchases are all in the public record. Without a prenuptial arrangement, those homes will have to be split up as marital property in a potentially costly, complex and public divorce. Conscious uncoupling does not preclude litigation and legal wrangling by either spouse. Prenuptial agreements must be read in court at the time of a divorce, and that is how they end up becoming public knowledge.”
“These two entertainers were already successful when they met and got engaged. If they each came into the relationship with an irrevocable trust, their conscious uncoupling will be a lot easier and the public will not know about it,” explained Mr. Beatrice. “Besides, prenups have been invalidated and set aside by the courts numerous times. This does not happen with irrevocable trusts as they are not revealed to the public and the separate property contained therein does not generally commingle with marital assets. Let's not forget that the signature of a future spouse is not required with irrevocable trusts.”
In the end, only time will tell how the uncoupling of Paltrow and Martin develops. In the absence of an irrevocable trust, it is possible that the assets they brought to the marriage may end up contested in court. And if they signed a prenuptial agreement, the tabloid and gossip media will certainly be on the lookout for any juicy details that become known in court. Unlike marriages and civil unions, irrevocable trusts cannot be easily broken.
About Estate Street Partners (UltraTrust.com):
For 30 years, Estate Street Partners has been helping clients protect assets from divorce and frivolous lawsuits while eliminating estate taxes and probate as well as ensuring superior Medicaid asset protection for both parents and children with their Premium UltraTrust® Irrevocable Trust. Call (888) 938-5872 to learn more.
1. edition.cnn.com/2014/03/26/living/gwyneth-paltrow-conscious-uncoupling-elle/index.html – 3/26/14
2. voanews.com/content/conscious-uncoupling-new-age-divorce-or-real-legal-term/1894285.html – 4/14/14
3. latimes.com/business/realestate/hot-property/la-fi-hotprop-gwyneth-paltrow-20140319,0,2635038.story#axzz2x6nDKLSl%C2%A0 – 3/19/14
4. courts.ca.gov/1032.htm – 4/18/14
5. theconversation.com/conscious-uncoupling-and-the-sanitisation-of-divorce-24921 – 3/28/14
6. business-standard.com/article/news-ians/paltrow-martin-plan-to-live-together-post-split-114032900072_1.html – 3/29/14
7. zillow.com/blog/gwyneth-and-chris-buy-in-malibu-146834/ - 3/14/14