How is Cryptocurrency Divided in a New Jersey Divorce?
Posted March 21st, 2024.
Categories: Blog.
Like any asset, cryptocurrency will need to be assessed and divided during a divorce. New technology and digital assets can be more complex to evaluate and split, but with the help of family lawyer Mark S. Guralnick, you can ensure your rights are protected during your divorce.
What is Cryptocurrency?
Cryptocurrency is an online form of currency that can take the shape of digital coins, tokens, playing cards, works of art, videos, and more. These currencies can be bought and sold similarly to stocks. Crypto transactions are recorded and stored in a digital database called a blockchain.
During a divorce, it can be difficult to evaluate the value of cryptocurrency because of its volatile nature and lack of intrinsic value. It is also possible due to the anonymity of crypto that a spouse can potentially hide monetary assets in the digital landscape. It can be difficult to determine ownership of crypto assets without a secure numeric password.
Is Cryptocurrency Considered Marital Property During a Divorce?
Determining whether or not cryptocurrency is marital or separate property is a similar process to any other asset. If the crypto was purchased during the marriage or with joint marital funds, it will be considered joint property and be subject to division during the divorce. If one spouse purchased the crypto with separate funds or before the marriage, it may be considered separate property.
What Are My Options When Dividing Crypto in My Divorce?
There are several ways that you and your spouse may decide to go about dividing cryptocurrency assets. There is not a one-size-fits-all solution, but there are options that you can pick from to suit your needs based on your relationship and financial situation. Some options include the following:
- Liquidate the assets
Probably the simplest solution is selling all of the eligible crypto assets and getting cash. The cash can be distributed equitably between the two parties. - Transfer a portion
Have the cryptocurrency evaluated to determine what it is worth. Whichever spouse owns the digital assets can then transfer or trade them to the other spouse to maintain their status in the digital landscape while still distributing them equitably - Substitute with other assets
Another option is for one spouse to remain the sole owner of the cryptocurrency and offer the other spouse more of another asset with the same value. For example, if one spouse’s fair share of the cryptocurrency is $500,000 and they are also deciding how to divide their family home that is worth $500,000 they could offer to give the house to the other spouse in exchange for maintaining ownership of the crypto. Both parties and a judge will have to agree to this.
It is important to note that the value of crypto assets fluctuates regularly. Because there is no inherent value and it is all based on supply and demand, they may be worth a substantial amount of money one day and then nothing the next. This fact can make division complex.
