Valuing and Dividing Digital Currency in Your Illinois Divorce

 Posted on November 08, 2021 in Divorce

Cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin have become increasingly popular investment tools. Studies show that about 13 percent of Americans bought cryptocurrency during the past year and many experts expect that number to increase. Like stocks, digital currency fluctuates considerably in value. This can make it especially difficult to value and divide in a divorce case. Furthermore, because Bitcoin and other cryptocurrencies are not held in a bank account like traditional currency, crypto is a popular vehicle for hiding assets during divorce. If you or your spouse have invested in cryptocurrency and you plan to divorce, an experienced divorce lawyer can help.

Determining the Value of Crypto

One of the most important aspects of a divorce is the division of marital assets and debts. Before spouses can negotiate a property division arrangement, they must take stock of what they own and owe. Valuing cryptocurrency for the purposes of asset division during a divorce is tricky. The value of a crypto investment when a spouse initially filed for divorce may differ dramatically from the crypto’s value several months into the divorce process. One option is to include a volatility formula into the property division agreement. Couples must also consider the tax consequences associated with the distribution of cryptocurrency and other assets during divorce.

Who Has a Right to Digital Currency?

In Illinois, property obtained by either spouse during the marriage is part of the marital estate and must be distributed between the spouses equitably. Spouses may reach their own property distribution arrangement, or they may take the issue to court. Understanding who has a right to cryptocurrency in a divorce is harder than it may seem. When assets are mixed or comingled, an asset can lose its identity as either marital or non-marital. For example, consider a spouse who purchased Bitcoin prior to getting married. Because the asset was obtained before the marriage, it is separate property and therefore excluded from the marital estate. However, if that spouse sold the Bitcoin investment and deposited the profits in a shared account, the funds may be considered marital property.

Wheaton Asset Valuation and Division Lawyer

The way that property is divided in a divorce will have a long-term impact on the spouses’ futures. If you are getting divorced and you or your spouse own digital currency or other complex investments, you need an attorney who knows how to properly address these assets during divorce. DuPage County family law attorney Jessica Sendek is highly skilled in property valuation and division. Call Hensley Sendek Law at 630-358-9029 today for a free consultation to learn more.

Sources:

https://www.cnbc.com/2021/07/23/13percent-of-americans-traded-crypto-in-the-past-year-survey-finds.html

https://www.cnbc.com/2021/05/28/dividing-cryptocurrency-in-a-divorce-settlement-is-complicated.html