Cryptocurrency divorce lawyer in Stuart
Ohle & Ohle can help ensure Bitcoin assets are disclosed and considered
The identification of all marital assets is critical to ensuring a Florida divorce is settled equitably. In the 21st century, cryptocurrencies like Bitcoin and Ethereum represent a new class of assets that require special consideration regardless of whether they’re disclosed or concealed by a spouse. At Ohle & Ohle, our skilled Stuart cryptocurrency divorce attorneys work with financial specialists to track down these digital assets and negotiate an appropriate and fair division.
Surge in popularity
When Bitcoin creators introduced the digital currency independent of a bank or central government in 2009, few people held any coins, and its value was low. Fast-forward a decade and cryptocurrency has become a major presence in global finance. One cryptocurrency exchange estimates that 21.2 million U.S. adults now hold cryptocurrency. That number equals about 14% of the national population. In June 2021, Miami was the scene of the Bitcoin 2021 conference that attracted thousands of cryptocurrency enthusiasts.
Cryptocurrency, like Bitcoin, often attracts people who desire privacy in monetary transactions and the ability to move funds throughout the world without necessarily using a financial institution. These factors; however, do not make it impossible to locate cryptocurrency assets.
Potential obstacles in divorce court
Valuation presents the primary difficulty when two people need to divide digital currency. Cryptocurrency assets are notorious for sharp shifts in value over short periods of time. For example, on April 12, 2021, a Bitcoin’s value was $63,558.48, but on May 20, 2021, it had dropped to $37,287.39. Other forms of digital currency also experience price volatility.
Frequent ups and downs in valuation make negotiations tricky during a divorce. Negotiations often involve exchanges of assets for like value or the division of individual assets to arrive at an equitable settlement. A decision based on one value could become a large loss or gain for one person a couple months later depending on what happens.
Lack of familiarity with cryptocurrency or outright discomfort with it add another wrinkle to divorce negotiations. An agreement to simply divide Bitcoin holdings and give each former spouse a share might not sit well with a person who does not have a cryptocurrency wallet. To receive cryptocurrency, you need to set up an account at a cryptocurrency exchange. You may not wish to do that. Alternatively, you may wish to receive more familiar assets, like U.S. dollars or real estate, instead of a digital asset.
Approaches to Bitcoin division
After identifying cryptocurrency as a marital asset and considering its valuation, you have four main options for dividing the asset:
- 1. Simple Division: In this approach, you simply receive a share of the cryptocurrency in its current form. The Bitcoin or other digital currency is not liquidated into a cash. You establish your own cryptocurrency account, and its value on the day of distribution is whatever it is on that day. You assume the risk that its worth may decline in the future but also gain the chance that its value could rise.
- 2. Custodial Holding: Should you not wish to set up a cryptocurrency account, you may find the custodial approach suitable. A third-party custodian who can transact in cryptocurrency receives your share and holds it until the divorce is final. At some point thereafter, the custodian liquidates the asset and distributes the money to you in your preferred currency. Expect to pay fees for this service.
- 3. Cryptocurrency Owner Liquidation: The former spouse who owns the asset will convert the other party’s share to cash. The digital currency’s value on the day of sale determines how much money you receive.
- 4. Liquidation With No Claim Upon Remaining Cryptocurrency: This approach starts the same as #3. The owner converts the other person’s share of cryptocurrency to cash and distributes it as part of the divorce settlement. However, both parties have agreed in advance that the original owner of the cryptocurrency now has full title to the remaining asset and does not owe the former spouse any more of the cryptocurrency regardless of how its value may change in the future.
Choosing how to distribute cryptocurrency in a divorce requires careful evaluation of the overall value of the marital estate and tax consequences upon distribution. You may need to weigh advice from a tax accountant, financial planner and divorce attorney to arrive at the best solution for your unique case.
Attempts to conceal assets from a family court are nothing new in divorces. Offshore accounts, cash in safety deposit boxes, and collectibles have all been used to shift money out of marital accounts prior to a divorce. Cryptocurrency adds another opportunity to do this because a spouse may be unaware of cryptocurrency investments. There may be no financial statements from brokerages to reveal the investments.
Even if a spouse does know about cryptocurrency purchases, that person may have no idea how to access the account. A divorce attorney specializing in cases involving Bitcoin can investigate hidden assets by consulting a forensic accountant and forensic computer specialist. Most cryptocurrency transactions are traceable at some point. A divorce attorney may prepare subpoenas to force your former spouse to turn over materials and records for inspection. Subpoena powers also apply to records from cryptocurrency exchanges, like Coinbase or Binance, where people typically trade in digital currencies.
Places where your Bitcoin divorce lawyer might find evidence of cryptocurrency concealment:
- computer hard drives
- tax returns
- loan applications
- credit card statements
Such records could reveal purchases of cryptocurrency or declarations of holdings for income tax purposes or when applying for credit. Clues to cryptocurrency transactions may reside on mobile devices in the form or searches for ticker symbols for digital currencies, login credentials for digital wallets, and confirmation emails about completed transactions.
Does my spouse have cryptocurrency?
One or a combination of the following could indicate your spouse possesses Bitcoin or other digital currency:
- financial disclosures for the divorce do not realistically match income
- your spouse talked about cryptocurrency or actually mentioned owning it
- bank records show transactions on a cryptocurrency exchange
- your spouse made large and unusual online purchases but does not have the merchandise
- cryptocurrency exchange apps are on a mobile device
- bank accounts show unexplained cash withdrawals that are a lump sum or installments
- your spouse is technologically savvy
Divorce allows people to chart a new future, but the process often bogs them down in the past. An uncooperative former spouse may force you to invest in an investigation to track down assets. If you suspect that a considerable sum has been smuggled out of the marital estate, this effort could well be worth it.
When your former partner willingly discloses cryptocurrency assets, you still may have questions about how it influences your settlement. At our law office in Stuart, you may consult a divorce lawyer skilled at negotiating high-asset divorces. Cryptocurrency often only represents one financial angle that you need to consider when dividing assets. Our cryptocurrency divorce attorneys in Stuart could empower you when your financial future depends on today’s decisions and enforcement of your legal rights. Contact us at Ohle & Ohle, P.A. today.
Cryptocurrency / Divorce FAQs
Is cryptocurrency considered a ‘marital asset?’
Although cryptocurrency is a new type of asset, this does not automatically remove it from a divorce proceeding. If a person acquires a cryptocurrency while married, then that asset legally represents a marital asset. Any items of value, tangible or intangible, acquired or bought while married almost always become marital property. An inheritance presents a typical exception as long as the inherited funds were not mixed with marital assets.
How can Bitcoin be hidden from assets?
Although many domestic cryptocurrency transactions can be traced successfully, foreign cryptocurrency exchanges create barriers to asset discovery. These offshore entities may not cooperate with requests for information. Another approach to shifting marital income into hidden cryptocurrency is the use of private peer-to-peer transactions. Cryptocurrency coins, like Bitcoin, need not go through an exchange when traded. A person can simply send a Bitcoin payment to another person with a cryptocurrency account. This may be accomplished by buying luxury goods and then privately trading the merchandise with an individual for cryptocurrency. Someone could also just hand over cash to someone willing to send cryptocurrency for the money.
What makes cryptocurrency so valuable?
Bitcoin, as the original cryptocurrency, has grown to have significant value. As a result, other cryptocurrencies have emerged, but few approach the current value of Bitcoin. The value given to Bitcoin currently derives from its apparent ability to meet the criteria of a currency, which are scarcity, divisibility, utility, transportability, durability, and counterfeitability.
Additionally, people have come to use it as a store of value that can be transferred and exchanged. Its decentralized nature, meaning that it is governed by computer code and a global blockchain network, appeals to people who want to a medium of exchange independent of government and bank control.