How to Protect Your Cryptocurrency with a Prenup

Whether you dabble in cryptocurrency when you have a little extra money or you’ve put substantial time and energy into learning the ropes, you are likely very protective of what you’ve built and what it may grow into. It may interest you to know that you can protect your cryptocurrency with a prenuptial agreement.

Considering a prenuptial agreement to safeguard your cryptocurrency and other assets? The earlier you consult with a prenuptial agreement lawyer in Alabama, the sooner you can take steps to protect what is important to you. Call Kirk Drennan Law at 205-803-3500 to set up a consultation with our team now.

Crypto Has Been the Target of Divorce Feuds

If you look for news on the topic of divorce and cryptocurrency, you’ll find tales of bitter disputes over cryptocurrency. Most cases are fairly similar—one partner invested in cryptocurrency out of curiosity or genuine interest and ended up making more money than they expected. When they divorced, their spouse demanded a share of the cryptocurrency, despite showing no interest in it previously.

What If You Don’t Have a Prenup?

It doesn’t really matter if one partner has no interest in cryptocurrency or even if they are outwardly derisive about it. If their spouse buys cryptocurrency during the marriage and they later divorce, the uninvolved spouse is generally entitled to some share of the cryptocurrency.

Crypto is treated the same as any other asset during a divorce. Consider, for example, retirement funds. One party works full-time and puts away tens of thousands of dollars in their retirement account over the course of their marriage. Even though only one partner contributed to the retirement account, both spouses are entitled to a share of those funds during a divorce.

You Can Keep Crypto Separate from Marital Assets

That’s why you absolutely need a prenuptial agreement if you don’t want to split your cryptocurrency up during a divorce. Think about the complications of doing so. Either the non-crypto-using partner will need to get their own crypto wallet and jump right into using cryptocurrency, or the crypto-owning partner will need to cash out and pay the other spouse the cash value.

This is complicated by the volatile nature of cryptocurrency. The amount it’s worth when you come to an agreement during negotiations is unlikely to be the same amount it’s worth when the divorce finalizes months later.

With a prenuptial agreement, you can specify that your cryptocurrency assets are not to be considered marital property in the event of a divorce. Even if you and your partner never split, you’ll enjoy peace of mind.

Full Disclosure is Key

During the prenuptial agreement process, you need to disclose your crypto assets in their entirety to your partner. This means telling them how much you currently own and how much it is worth. If it has the potential to be a lot, don’t be surprised if they hesitate when it comes to signing a prenuptial agreement. But full disclosure is not optional—if you hide the truth from your partner in order to get them to sign a prenuptial agreement, the entire agreement could be declared null and void in court.

A Prenup Can Protect Both Parties

A prenuptial agreement can swing the other way and protect your partner should your cryptocurrency turn out to be more of a liability than expected. If your cryptocurrency crashes and loses 90% of its value, you could be left with something worth tens of dollars that you spent thousands of dollars on.

Should you then divorce, your partner would likely not be expected to give up more of the marital assets to cushion the loss of your cryptocurrency, as it was explicitly determined not to be marital property in your prenup. An agreement like this must be fair to both parties in order to hold up in court.

Discuss Your Prenuptial Agreement Needs with Kirk Drennan Law

At Kirk Drennan Law, we have extensive experience in prenuptial agreements—including those involving cryptocurrency, NFTs, and other complex assets. Let us create an agreement that protects your best interests. Give us a call at 205-803-3500 or send us a message online to learn more about how we can help.