The division of assets in a divorce has changed over the last decade, as the use of cryptocurrency and digital financial assets has increased substantially. In a divorce with many high-value financial assets, a fair division of marital property is important to protect your future. It’s important to know how cryptocurrency and digital assets are found and divided in a California high-asset divorce.
Cryptocurrency and other digital assets make a divorce more complicated because it requires:
- Finding the digital asset, which is especially hard for difficult-to-track cryptocurrency
- Assessing what is marital property and what is separate property
- Appraising the value of the digital asset, which is uniquely complicated for continually changing assets like cryptocurrency
Uncovering Hidden Digital Assets and Cryptocurrency
The average income in California is $140,112 per household, compared to the national average of $114,296. In high-asset divorces, the risk of hidden assets is much greater.
Spouses are more likely to take steps to try to hide assets from being divided as marital property and take steps to conceal assets from being counted as part of their own resources for spousal support and other determinations.
In order for a fair result in the divorce, all assets and debts have to be disclosed, and spouses in California are required to make this disclosure during separation.
It is much easier to hide cryptocurrency and similar digital assets compared to other assets, due to private wallets, coin conversions, and other protections. However, these assets can still be uncovered in a divorce, using methods like:
- Forensic accountants. These professionals can help assess financial information for partners to determine if assets are hidden based on financial discrepancies and transactions. Uncovering this information is the first step to finding the relevant digital asset.
- Formal discovery. Discovery, when it is court-ordered, involves several methods to uncover hidden assets, including interrogatories, requests to produce documents, and subpoenas to third parties. Courts can order spouses to disclose information. If a spouse lies or hides assets during formal discovery, they can be charged with contempt of court or perjury.
If you think your spouse is concealing assets, formal discovery and experienced professionals are crucial to help uncover those assets.
Dividing Cryptocurrency and Digital Assets in California Divorces
The property that is divided in a divorce is marital property, also called community property. Separate property is not divided. Determining which assets are categorized as separate or marital property is a crucial part of dividing property. In California, marital assets are divided equally, or as close to 50/50 as is possible.
Your marital property includes assets and debts obtained during the marriage, excluding gifts or inheritance given directly to one spouse. Cryptocurrency and other digital assets can be divided in a divorce if they are categorized as marital property.
There are different ways the assets could be divided, including:
- Give one-half of the coins or tokens to each spouse
- Buying out the other spouse’s interest in the cryptocurrency with a cash amount
- Selling the cryptocurrency and splitting the profits
If the court decides the division of assets, it determines who gets what. If you and your spouse make an agreement out of court, you have control over how those assets are divided.
Valuing Digital Assets and Cryptocurrency
In order to fairly divide marital assets, or assess a spouse’s separate assets, they must be evaluated. This is especially complex for cryptocurrency and other financial digital assets, because the value of these currencies is frequently changing.
Appraising at current market value can be incredibly unstable, and it’s important to take that into account when dividing assets. Spouses may decide to value based on the date of separation for consistency, or may ensure both parties have a stake in the cryptocurrency.
FAQs
How Do You Divide Cryptocurrency in Divorce?
Cryptocurrency in a divorce is divided like any other asset. If it is considered marital property, then it might be equally or equitably split, depending on where you are getting a divorce and whether the court decides the division of assets.
The cryptocurrency is evaluated and added to the total value of marital property, which should be split between spouses. How that split is handled depends on the agreement made.
What Assets are Untouchable in a Divorce in California?
In California, separate assets are untouchable in a divorce. This covers assets you obtained before you became married and after the date of legal separation. Most assets during your marriage are not untouchable, as they are considered marital assets or community assets. If you can show that assets you obtained during the marriage were given directly to you as a gift or inheritance, then those are considered separate assets.
Can My Wife Take My Bitcoin in a Divorce?
Whether or not your spouse can take your Bitcoin in a divorce depends on whether it is considered marital or separate property. If it is considered marital property, meaning you obtained it during the marriage, then your spouse likely has equal rights to the Bitcoin.
Whether your spouse will take the Bitcoin can depend on the outcome of property division. If you and your spouse negotiate your property division, you could retain your Bitcoin in exchange for other property.
Why Do I Need to Hire a High-Asset Divorce Lawyer in California?
You need to hire a high-asset divorce lawyer in California to protect your interests during the process and secure the ideal outcome for your divorce case. In a high-asset divorce, there are unique considerations, like complex asset valuations, extraordinary expenses for child support, and greater income disparities between spouses. There is also a higher likelihood of hidden assets.
A California divorce lawyer has the resources and experience to handle all of these issues. They help protect your immediate and long-term financial interests.
Hire a High-Asset Divorce Lawyer at Kramer & Zitser, LLP
It’s important that you hire a high-asset divorce lawyer with the relevant experience and understanding of your unique type of case.
At Kramer & Zitser, LLP, our team is a partnership between two senior attorneys who have over 50 years of collective family law experience, and we understand the unique requirements of high-asset divorces and cases involving digital assets. We can help you navigate a divorce, whether you have filed with the Metropolitan Courthouse in Los Angeles or the Santa Monica Courthouse. Contact us today.
