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Trusts can make a worthy substitute for a prenuptial agreement

Prenuptial agreements are no longer frowned upon. Sure, it may still be a difficult discussion to have with your spouse; but a prenuptial agreement is to the benefit of both spouses. It protects what they want protected and establishes rules that they agree with; rules that override the "base" laws used by the state of Florida should a divorce occur. Without a prenup, the "base" laws apply, and they could lead to complications and heartache for the splitting spouses.

Another thing to remember about prenuptial agreements is that, as they have gotten more popular, they have also become more vulnerable to legal challenges. Poorly-worded prenups can spur a spouse to contest the validity of the document. To prevent this, you want to consult an experienced divorce attorney who can help draft a strong prenup that contains the necessary framework to hold up to certain challenges.

When you consider that the divorce rate is around 50 percent, you can see why prenuptial agreements have taken on a more prominent role in divorce. They are even more important for people who have significant assets.

However, say you and your spouse cannot agree on a prenuptial agreement; or maybe such a contract simply is not an option. There is an alternative that could help: trusts.

Now, trusts are not as reliable as a prenup; but they certainly can help you shield assets from divorce. Setting up a trust in preparation of marriage (or divorce) can be complex. Depending on your situation, the laws that apply to the specific type of trust you want to use can change. So, just like with a prenup, it is crucial to discuss things with a lawyer before establishing a trust.

Source: Barron's, "Divorce Trusts," Tatiana Serafin, May 18, 2013

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