Digital Assets and Divorce: The New Property Division Frontier  

 Posted on May 12,2023 in Divorce / Family Law

One of the most foundational elements of any divorce case is the division of marital assets. Traditionally, marital assets included things like real estate properties, bank account balances, retirement funds, and investment income. However, with the advent of digital assets and digital currency, property division during divorce has become much more complicated.

Cryptocurrency, non-fungible tokens (NFTs), and other types of digital assets have an equivalent value in real currency, so they must be properly addressed during divorce, just like any other asset. However, classifying digital assets as marital or non-marital property and determining the value of the assets can be a real challenge.

Determining Ownership of a Digital Asset in a Divorce

Digital assets can be broadly defined as anything that is created and stored digitally and has value. Digital assets may include documents, data, videos, software code, and even social media accounts. Some of the newest types of digital assets include security tokens, crypto assets, NFTs, and cryptocurrencies such as Bitcoin, Ethereum, tether, and USD coin.

Digital assets are treated just as any other type of asset during a divorce. This means that if a spouse acquired a digital asset during the marriage, both spouses have a right to a portion of the asset’s value. The main exception to this is if digital assets are excluded from the marital state through a marital agreement such as a prenup. Digital assets that were received as a gift or inheritance are also typically excluded from the marital estate.

Valuing and Dividing Digital Assets During Divorce

Digital assets that are marital property must be addressed during the property division phase of the divorce. Unfortunately, valuing digital assets is much more complicated than valuing a vehicle or piece of real estate.

As anybody who has invested in Bitcoin or other cryptocurrencies can attest, the value of these types of digital assets varies considerably over time. The valuation method needed to determine the worth of a digital asset will depend on the type of asset in question. For divorcing spouses with significant high-volatility assets such as Bitcoin, working with an experienced divorce lawyer as well as a financial professional is essential.

Contact our Geneva Property Division Lawyer

If you are getting divorced, reach out to experienced Geneva divorce attorney Cherissa "Reese" Loire Krajniak for help. Reese has ample experience in property division matters, child support, child custody, and other divorce issues. She can provide the personalized legal support and assistance you need. Call 630-448-2406 for a case assessment to get started.

Source:

https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets