Cryptocurrency and Divorce
Over the years, there have been ups and downs with cryptocurrency and divorce. However, many couples have made substantial profits by capitalizing on this new trend. A couple’s wealth may occasionally derive primarily from astute bitcoin investments.
Many people have misconceptions about bitcoin and cryptocurrency, and if your ex-spouse was in charge of your entire financial plan, you might not be aware of all the finer points. You might be wondering how these assets are distributed in a divorce if you’re going through one. Do courts even acknowledge these properties?
A knowledgeable, experienced family law attorney can provide answers to all of these inquiries. A knowledgeable lawyer is up to date on all the assets, including cryptocurrency, that can be shared between a couple in a divorce.
What Is Said About Cryptocurrency in North Carolina?
Let’s start by addressing the most crucial query: is cryptocurrency even allowed by North Carolina law? Even if there were some doubts regarding this when cryptocurrencies first gained popularity, the 2016 Money Transmitter Act provided a definitive answer to these issues.
This statute established a precise definition of virtual currency and made it legally recognized in North Carolina. In North Carolina, permits are required for all bitcoin traders, indicating that the activity is regulated. This implies that, similar to a conventional stock portfolio or savings account, your bitcoin is acknowledged as an asset after a divorce and will be distributed fairly.
What is the division of cryptocurrency after a divorce?
Cryptocurrency is divided similarly to other assets because it is recognized by North Carolina law. You must first ascertain if this asset is independent or marital property. All of the things you have acquired during your marriage are considered marital assets. You will probably need to share equitable accounting of your bitcoin holdings with your spouse if you bought it after you were married. Your cryptocurrency investment is typically regarded as distinct property and is probably not going to be subject to equitable distribution if you bought it before to the marriage.
Having said that, dividing property in the context of cryptocurrencies presents a special challenge. The value of these assets has increased dramatically in recent years, and the court can take that into consideration. You could have to divide the assets according to the growth in value that happened during the marriage, even if you bought your bitcoin before the marriage. This is particularly true if, years ago, you made a significant fortune off of a relatively tiny bitcoin investment.
Factors considered during the division of cryptocurrency assets in divorce in North Carolina
Classification as Marital or Separate Property
In North Carolina, like in many other states, the classification of assets as marital or separate is a critical factor in property division. If the cryptocurrency was acquired during the marriage, it may be considered marital property subject to division.
Valuation of Cryptocurrency
Determining the value of cryptocurrency can be challenging due to its volatility. The valuation date is significant, and parties may need to agree on or seek court guidance on how to value the cryptocurrency for the purpose of equitable distribution.
Equitable Distribution Principle
North Carolina follows the principle of equitable distribution, which means that marital property is divided fairly but not necessarily equally. Courts consider various factors, such as the duration of the marriage, the financial contributions of each spouse, and the economic circumstances of each party.
Expert Valuation and Testimony
Due to the unique nature of cryptocurrency, it may be necessary to engage experts in the valuation process. Expert testimony may be presented to the court to establish the value of the cryptocurrency accurately.
The tax consequences of dividing cryptocurrency assets should be considered. Transfers of cryptocurrency between spouses incident to divorce may have tax implications, and it’s advisable to consult with tax professionals.
Protecting Access to Cryptocurrency
If one spouse has exclusive control or access to cryptocurrency holdings, the other spouse may need to take steps to ensure a fair division. This may involve obtaining a court order to prevent dissipation of assets.
Agreements and Negotiations
Spouses can negotiate the division of cryptocurrency assets through settlement agreements, which may include provisions for the transfer of specific amounts or percentages of cryptocurrency.
Enforceability of Agreements
Any agreements reached regarding the division of cryptocurrency assets should be properly documented and may need court approval to be enforceable.
Given the complexity and evolving nature of cryptocurrency law, seeking guidance from an attorney experienced in family law and knowledgeable about cryptocurrency issues is crucial.
Laws and regulations may have changed, so it’s important to consult with a family law attorney in North Carolina for advice tailored to your specific situation. Additionally, if there have been significant legal developments in cryptocurrency law, an attorney can provide the latest information.
Difficulties with Cryptocurrencies During a Divorce
The first significant issue with cryptocurrencies is their unpredictability. The value of your assets could change significantly in a few days. The timing of purchases and sales is crucial. Selling assets and splitting the proceeds is a traditional way to divide them. However, this strategy might backfire with bitcoin, particularly if partners are pressured to sell at a bad time. Some spouses can be completely opposed to selling their bitcoin. Splitting the bitcoin wallet without really selling them would be a more efficient way to go about things. This implies that the quantity of bitcoin received by each spouse is equal.
Seek the Advice of a Skilled Family Law Attorney
As you can see, managing cryptocurrencies throughout a divorce in North Carolina has grown more and more important. The best course of action for resolving your worries with cryptocurrency in your marital estate is to work with a knowledgeable, experienced divorce lawyer.
Frequently Asked Questions About Cryptocurrency and Divorce
1. Are cryptocurrencies considered marital assets in a divorce?
In many jurisdictions, assets acquired during the marriage, including cryptocurrencies, are considered marital property and subject to division during divorce proceedings.
2. How are cryptocurrencies valued in a divorce?
Valuing cryptocurrencies can be challenging due to their volatility. Couples may need to agree on a valuation method or seek the assistance of financial experts who specialize in cryptocurrency valuation.
3. Can one spouse hide cryptocurrency assets during divorce proceedings?
There have been cases where spouses attempt to conceal cryptocurrency holdings. It’s important for both parties to disclose all assets honestly. Forensic accountants or digital asset experts may be employed to trace and uncover hidden assets.
4. What steps can be taken to protect cryptocurrency assets during marriage?
Couples may consider prenuptial or postnuptial agreements that specifically address the treatment of cryptocurrency assets in the event of a divorce. Clear documentation of ownership and transactions can also be helpful.
5. How are cryptocurrency assets divided in a divorce?
Division of cryptocurrency assets depends on the laws of the jurisdiction and the specifics of the case. Courts may consider factors such as the contributions of each spouse, the duration of the marriage, and local property division laws.
6. Can the court force the transfer of cryptocurrency as part of the divorce settlement?
Yes, if a court determines that a spouse is entitled to a share of cryptocurrency assets, it can order the transfer of those assets as part of the divorce settlement.
7. Are there tax implications associated with transferring cryptocurrency in a divorce?
Transfers of cryptocurrency between spouses during a divorce may have tax implications. It’s essential to consult with tax professionals to understand and address potential tax liabilities.
8. What if one spouse invested in cryptocurrencies before the marriage?
The treatment of assets acquired before the marriage can vary. In some jurisdictions, pre-marital assets may be considered separate property and not subject to division. However, specific legal advice is crucial.
9. Can a spouse claim a share of the other’s cryptocurrency gains after separation but before divorce?
The treatment of assets acquired between separation and divorce can depend on local laws. Some jurisdictions may consider such assets as separate, while others may include them in the marital estate.
10. Is it necessary to involve a cryptocurrency expert in divorce proceedings?
Given the technical nature of cryptocurrencies, involving a financial expert or forensic accountant with experience in digital assets can be beneficial to ensure accurate valuation and proper handling of these assets.