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I was going to say, Karsten sounds like Carter and Kirsten put together. To me, its a trendy way to combine the two.

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All in all, I dont know if I would go with it if the two are cousins, but then again, lots of people say because they are cousins, it really doesnt matter. Maybe mention it to the family - especially if you are close and the kids will be around each other a lot. If you rarely speak, as some families dont, I guess it wouldnt matter too much.