Cryptocurrency ownership complicates divorce settlements

Cryptocurrency ownership complicates divorce settlements

On Behalf of | Mar 30, 2022 | Uncategorized

Divorces can be complex. The simplest divorces are when the spouses share no children and own very little marital property together. Even when children are taken out of the equation, spouses with robust stock portfolios, multiple retirement accounts and other investment assets may find it challenging to extricate themselves from their marriages.

But in recent years, one particular asset has risen to the forefront of divorce settlements – cryptocurrency.

Are cryptocurrencies part of your marital estate?

Although there are well over 20 million individuals in the United States who own cryptocurrency, dividing these elusive assets in divorce has been problematic. Digital currencies like first-generation wave bitcoin and Ethereum and newcomer growth upstart dogecoin may exist in your marital digital portfolio unbeknownst to you.

To split it, you must know it exists

Contrary to popular belief, it is not impossible to track cryptocurrency purchases. Expensive and painstaking, yes, but never impossible. If you know or suspect that digital currencies comprise a significant portion of your marital estate, it could be well worth the investment to retain a forensic accountant to do a deep dive into your marital finances.

 Valuation is also an issue

Due to its extreme volatility, cryptocurrency remains difficult to valuate. Its value can fluctuate wildly based on many disparate factors like the relative stability of the international financial markets or a wry tweet by Elon Musk. Crypto values can both soar and plunge within the same 24-hour cycle, giving investors a sense of digital whiplash.

Concerting stashed cash to crypto

Some divorcing spouses attempt to reduce the marital estate by selling off expensive assets and purchasing cryptocurrencies with the proceeds. If you know or suspect your spouse might be doing just that, it is prudent to alert your family law attorney to that possibility. Otherwise, you could receive far less than your legal share of the marital assets in your divorce settlement.