As technology advances, the law scrambles to keep up. You might wonder what technology has to do with a divorce, but thanks to new methods of tech-driven investing, it is now a subject coming up far more frequently. Investing in cryptocurrencies, like bitcoin, is becoming increasingly popular, which can make asset distribution during your divorce even more challenging. If you have cryptocurrency in your asset portfolio, we recommend speaking with an experienced Century City divorce lawyer who can help determine whether your particular situation means your cryptocurrency is subject to property division during your divorce.
California is a community property state, which essentially means spouses are supposed to divide community property equally. In the event one spouse purchased cryptocurrency prior to getting married, the court would consider it separate property and not subject to asset division. It may also be separate property if you inherited it or it was gifted to you.
One of the biggest challenges with a divorce is determining the value of cryptocurrencies. For example, Bitcoin was at a high of close to $20,000, and only a few months later, the value dropped to around $6,000. Because there’s a good chance the value will fluctuate dramatically within the course of the divorce, it’s not easy to value cryptocurrency.
For example, imagine there is an initial investment of $100,000 made by the spouse during the marriage. When the divorce is filed, it is now valued at $1,000,000, but once it’s time to discuss asset distribution, it’s only worth $500,000. One method might be to split the bitcoin itself rather than place a value on it.
Another challenge with cryptocurrency and divorce is determining ownership. One spouse could have acquired Bitcoin without the other spouse even knowing and burying their wealth offline. There are tools that are available that can help track hidden assets like Bitcoin, but you need to retain a Century City divorce attorney who is familiar on how to use them.
When a spouse trades cryptocurrency using an online exchange or purchases them from a bank account, it’s easier to trace. However, if they move their digital wallet onto a USB, it’s more difficult to track and may require the skills of a digital forensics specialist who can review your spouse’s emails. The problem is, this is a time-consuming process and could end up costing more than the value of the cryptocurrency.
Divorce is a complicated process to begin with, but adding in cryptocurrency can make the process even more challenging. It’s not wise to start divorce proceedings without speaking to a skilled Century City divorce lawyer first. Your attorney will ensure your rights are protected, can help you look for hidden assets, and will oversee the property division process to verify it’s fair and accurate.
If you have questions about cryptocurrency division during a divorce, or you are ready to start a divorce proceeding, contact the Law Offices of Evan Braunstein at 424-383-5315 to schedule a consultation.