When you read the news, you can’t go more than a few articles without seeing terms like Bitcoin, Ethereum, and Dogecoin. Cryptocurrency has exploded in popularity in recent years, and although it has seen some dips in recent months, it’s likely here to stay.
If you and your ex-partner own cryptocurrency, either separately or together, you may wonder how it is handled during a divorce. New types of assets always present new challenges, and with the help of an experienced divorce attorney you can figure out what role cryptocurrency may play in your divorce.
Get started with your divorce case today. The team at Kirk Drennan Law is here to help. Give us a call at 205-803-3500 to set up a consultation now.
How the Law Looks at Cryptocurrency
Under the law, cryptocurrency is an asset, just like any antiques, real estate, or other items you may own. Whether it’s considered a marital or separate asset depends largely on when it was acquired—before or during the marriage—and whether or not it grew during the marriage. Since Alabama uses an equitable distribution model, you can expect cryptocurrency to be divided in a manner that is considered fair, not necessarily split down the middle.
Dividing Cryptocurrency in Divorce
Divvying up cryptocurrency is a complex task. To start, the cryptocurrency market is very volatile. The price of different currencies can crash or soar from day to day, so getting a fair monetary value of the currency owned is difficult. The amount it’s worth when you negotiate the division of assets is unlikely to be the same amount when the divorce is actually finalized.
Additionally, you have to decide how you want the cryptocurrency to be split up. If both parties are active in the cryptocurrency market, they may both want to keep their share in its present form. They can simply divide them as agreed upon into each party’s cryptocurrency wallet. This also eliminates the issue of getting a fair monetary value of the coins themselves.
If only one party has an interest in cryptocurrency, the other may want their share in standard currency. Your attorney can help you understand the valuation process and figure out how much your share is likely to be worth when you divorce. The person who doesn’t want the cryptocurrency itself may choose to allow the other person to have all of the cryptocurrency in exchange for a different asset.
Can Your Spouse Use Cryptocurrency to Hide Assets?
One of the biggest potential issues with cryptocurrency is the fact that it can be used to hide assets. If one party is not involved in the cryptocurrency market, they may not understand how it works or even knows that their partner has a substantial amount of money tied up in it.
The good news is that those who do buy and sell cryptocurrency are not usually quiet about it. They are likely to talk about it with their spouse, friends, and family members before they decide to divorce.
If the other spouse knows that their ex-partner dabbles in cryptocurrency, they can alert their attorney. Your attorney can wait and see if your ex-partner declares their cryptocurrency assets in their disclosure of assets and debts. If they don’t, it may be time to dig a bit deeper. A forensic accountant or another investigative specialist can help uncover hidden assets like these.
Remember, though, that this may not be an issue for you. While hiding assets is something to be vigilant about, the majority of people getting divorced won’t even try it. They know that doing so puts them at risk of losing even more if their fraud is discovered.
Cryptocurrency can make your divorce more complicated, but with the right divorce attorney, you can feel confident that this asset is being divided fairly and equitably.
Start Planning Now with the Help of Kirk Drennan Law
As you start moving forward with your divorce, you deserve to know that you have a strong legal team on your side. At Kirk Drennan Law, we understand the complexities of high net worth divorces and the needs of our clients. To talk to us more about your case and your next steps, or call us at 205-803-3500.