Many difficult issues can arise in a divorce – and issues regarding how to divide the property you’ve accumulated during your marriage are certainly among them. This is true concerning all types of property – cars, real estate, family heirlooms – and it can be especially true when it comes to intangible property, like cryptocurrency.
Cryptocurrency has become increasingly popular in recent years for any number of reasons. In fact, it is estimated that more than 20 million Americans now own cryptocurrency. There are several different kinds of cryptocurrency – Ethereum, Bitcoin, Ripple, Litecoin, and several others. Regardless of which type of cryptocurrency you might own or be interested in investing in, many people find cryptocurrency to have some of the following advantages:
- Fees are low: Unlike some other investments, fees associated with cryptocurrency are typically very low. Often when using other online payment options, users incur any number of fees, and sometimes, those fees can be significant. Using cryptocurrency allows investors to avoid those fees, which is certainly an appealing advantage to many.
- Cryptocurrency is not attached to any particular government: It’s no secret that the international political climate can be quite volatile. For any number of reasons, this volatility causes some to have less faith in a currency that is tied to the government of a specific country. As a result, those who invest in cryptocurrency see it as a sensible way to attempt to protect their wealth and keep it separate from the changing fortunes of any one particular government or country.
- Cryptocurrency is increasingly becoming easier to use: While cryptocurrency was certainly novel and used by only a small percentage of the population at first, it is becoming increasingly popular and easier to use all the time as a result of more online companies choosing to adopt it. Many expect that this trend will continue in the future.
- It’s considered a sound investment: Many people see significant potential for profit in cryptocurrency. Those who purchase cryptocurrency at a low price see the potential to make a significant profit when that price rises as cryptocurrency becomes more popular.
Whatever your reasons for investing in cryptocurrency, the truth is that once you have accumulated cryptocurrency as an asset, it will be an issue to address during your divorce. In many cases, splitting digital currency can be more complex than dividing traditional investments like bonds, stocks, or mutual funds, and even more difficult than dividing a retirement pension or 401(k). If you and your spouse own cryptocurrency, here are a few helpful tips as you consider the divorce process and dividing this particular asset:
- Realize that it is volatile: One of the most difficult aspects of dividing cryptocurrency is determining its actual value. As with other investments where the value may swing quickly from month to month or year to year, cryptocurrency can also change significantly in value over a fairly short amount of time. For that reason, divorcing couples may consider adding a volatility formula or something to that effect into their divorce contract. As an example, the settlement agreement may provide that if the value of the cryptocurrency changes by a certain percentage, there may also be a corresponding change in how other assets are divided. This gives flexibility for changing circumstances and ensures that both spouses feel they will receive a fair and even split of the marital assets when all is said and done.
- Think through any tax concerns: As with most aspects of property division during divorce, taxes are always a consideration anytime an asset is being divided and distributed. A financial professional will be able to advise you as to any tax concerns concerning your particular circumstances. Factors to consider will be how long the cryptocurrency has been owned, how much the value has grown, what capital gains exist, whether income has already been reported for tax purposes and other concerns.
- Always be honest: Divorce isn’t an easy process, and sometimes emotions are running high. The pain of a divorce can cause people to act in uncharacteristic ways, and sometimes this includes trying to hide assets or otherwise engage in questionable and atypical behavior. It is highly advisable not to attempt to hide any information about whatever cryptocurrency you may own or to try to get rid of any cryptocurrency without the other spouse’s knowledge. Closing accounts, deleting evidence, or otherwise trying to hide an asset could have significant legal consequences. Always talk to your attorney before taking any actions that you believe may be questionable.
- Consider hiring a professional with expertise in cryptocurrency: The value of hiring a professional who understands the intricacies of cryptocurrency and how it might be handled in a divorce proceeding cannot be overstated. Whether it is a divorce attorney who has experience valuing and dividing cryptocurrency, or another financial professional, doing your research and selecting one that you can work well with is always a wise decision.
These are only a few helpful tips when it comes to thinking through how you might address the issue of dividing whatever cryptocurrency you and your spouse own during the divorce process. It’s also important to remember that as with any other issue that you will confront during the divorce process, you’ll have two options when it comes to cryptocurrency:
- Address the matter outside of court using alternative dispute resolution: Increasingly, couples are choosing to use alternative methods of dispute resolution – like mediation, collaborative law, or lawyer-led settlement negotiations – to resolve their issues outside of court. These methods are popular because they are less stressful, less time-consuming, and often far less expensive than traditional litigation. Even better, they allow couples the freedom and flexibility to sit down together, work through their issues with the assistance of their attorneys and come up with solutions that truly work best for their particular situation. Additionally, couples who enter into divorce agreements on their own later have the flexibility to modify those agreements as needed when life circumstances change, an option that many couples find very valuable and important.
- Have a court decide the issue for you: Sometimes, for any number of reasons, a couple simply isn’t able to work through their divorce issues on their own. In that case, the best course of action may be to allow a court to decide the matter for you. There is no “right” or “wrong” answer when it comes to resolving divorce issues – only what works best for your family. It is important to keep in mind, though, that when a court decides an issue, the court’s ruling is the final word on the matter, and that decision can only be changed by later seeking a modification from the court.
Finally, it is important to keep in mind that whatever route you choose to address the division of cryptocurrency, and all other aspects of your divorce, having the right legal team on your side as you go through the process can make all the difference.
The Law Office of Dustin McCrary – Here for You
Depending upon where you find yourself in the divorce process, you may find yourself feeling any number of things – but one thing you should never feel is alone. Whether you are dealing with financial and property-related issues like how to divide cryptocurrency or other assets, or some other matter like child custody, child support, or any other issue, at the Law Office of Dustin McCrary, we’re here for you. We understand divorce, and we know the best legal strategies to pursue on your behalf as you move through the divorce process and hopefully, toward a better and brighter chapter ahead. We have helped countless clients through divorce smoothly and successfully, and we would be honored to help you too. Call us any time. We look forward to speaking with you soon.