The New Frontier in Divorce: Dividing Cryptocurrencies
Looking for points of disagreement in a divorce is not particularly hard to do. Couples facing the end of a marriage often find the avoidance of giving in to volatile emotions that are easily triggered difficult. One area that is especially prone to the dispute is the division of marital assets. The more complex and valuable the property at stake is, the more invested each spouse is in getting the share he or she thinks is appropriate.
Property division is even more important now that federal tax law eliminates deductions for maintenance payments (spousal support), thus giving the higher-earning spouse much less incentive to agree to pay maintenance as part of a divorce settlement or pre-/post- marital agreement. This means the lower earning spouse will have to hope a large property settlement comes his or her way.
One additional asset that is becoming more of an issue among high net-worth couples is cryptocurrency. This digital currency is known for wild swings in value, but is gaining ever-growing traction among mainstream financial institutions and the federal and State governments. In fact, Illinois is considering allowing residents to pay their taxes with bitcoin. This lack of stability, as well as the ease of concealing its existence, can present challenges when evaluating how to address cryptocurrencies in a divorce.
Property Division Generally
Absent a pre- or post- nuptial agreement stipulating no division will occur, divorcing spouses are required to divide marital property, so each party receives financial resources that reflect his or her contribution to the marriage. This concept is known as equitable distribution and typically results in couples receiving roughly equal amounts of the marital estate.
High net-worth individuals, however, tend to have substantial assets that preceded the marriage and receive sizable inheritances while married, both being considered non-marital property, and thus, not subject to division. This can put the other spouse on unequal footing, which Courts sometimes neutralize by giving the spouse with fewer outside assets a greater proportion of the marital estate.
The goal of equitable distribution is to find an arrangement that is fairest for the circumstances of a particular couple. Furthermore, if a non-spouse has a much larger non-marital property estate, this factor could influence how a Court decides to divide the marital pot. Still, a number of other factors also play into a Court’s final decision.
The Complexities of Identifying and Dividing Cryptocurrency
Cryptocurrencies are a cutting-edge technology that many people do not understand at a basic level, let alone how to use it or assign a value. Judges are also trying to get a grasp on this area, which can present challenges when seeking to discover evidence of the existence of these assets and how to properly value them.
Cryptocurrencies, being digital and largely unregulated, are much easier to conceal, though a knowledgeable attorney will know how to know to identify and track the sale and purchase of cryptocurrencies, which a spouse could use to hide marital assets. In addition to locating them, the value of cryptocurrencies greatly fluctuate all the time, and the value of these items can vary greatly depending upon when a divorce is finalized. Because of this fact, dividing cryptocurrencies in-kind, instead of requiring one spouse to buy out the current value, may be a better solution to addressing this concern. As this form of currency grows in use and popularity, as well as the development of regulation that should stabilize its value, this complication should be easier to solve. However, for now, couples may have to compromise and employ creative solutions to overcome these challenges.
Speak with an Illinois Divorce Attorney
Property division is one of the most challenging aspects of divorce, but also pivotally important. If you are getting divorced and need assistance regarding property division or any other related issue, contact the Law Office of Nicholas W. Richardson, P.C. for advice. Dedicated Inverness family law attorney Nicholas W. Richardson understands what is at stake and will work to get you the best possible outcome. Contact the office for a free initial consultation.