Divorce and Cryptocurrency: What You Need to Know

Divorce in California can be complicated – and it can be even more complicated when cryptocurrency is involved. Divorce and cryptocurrency are appearing together more frequently in court, so here’s what you need to know.

Divorce and Cryptocurrency: What You Need to Know

When you or your spouse owns cryptocurrency, your divorce requires a different type of financial valuation than other types of divorces do. Cryptocurrency value fluctuates – and it’s not just Bitcoin that surfaces in California divorces any more (though Bitcoin is the most valuable). Dozens of other types of cryptocurrency have cropped up over the past few years, including Ethereum, Dash and ZCash, and the courts have to ensure they’re valued properly to make sure settlements are fair and equitable. Bitcoin divorces – or, more appropriately now, cryptocurrency divorces, are becoming more common.

The Darker Side of Divorce and Cryptocurrency

Unfortunately, because of the nature of cryptocurrency, it’s not incredibly difficult for one spouse to acquire a significant stash of it and never let the other spouse know. It’s incredibly important for both parties to fully disclose their incomes.

If you suspect your spouse has cryptocurrency that he or she isn’t disclosing, it’s a good idea to talk to your Stockton divorce attorney about your concerns. Your attorney will be able to explain your options and work with you to determine how to ensure your spouse isn’t hiding cryptocurrency during your divorce. There are tools available to trace cryptocurrency, and courts are generally used to tackling cases that require tracking assets.

How Courts Value Cryptocurrency in Divorce

Your attorney may suggest that rather than valuing your shared cryptocurrency assets during divorce, you split the cryptocurrency itself. You can divide it fairly, regardless of what it’s worth, and it can simplify the property division process.

The issue is that cryptocurrency’s value fluctuates – sometimes wildly – and that makes it hard to assign it a dollar value. If you have your cryptocurrency valued today and you agree on a dollar amount that needs to change hands, it may not be worth the same amount by the time the judge signs your divorce decree. That can benefit you, or it can hurt you.

Generally speaking, you’ll use two copies of California’s Schedule of Assets and Debts to agree on how much cryptocurrency you have between you. You and your spouse are supposed to trade documents before the property division process begins – it’s sort-of a checks-and-balances system. If you and your spouse agree that everyone’s told the truth about his or her assets and debts, then you can begin dividing your property.

Is Cryptocurrency Separate Property or Community Property?

In a divorce, cryptocurrency can be separate property or community property. Typically:

• If you entered the marriage with your own cryptocurrency, the courts will most likely consider it separate property. In many divorce cases, each person is entitled to his or her own separate property without sharing it with the other spouse.
• If you acquired the cryptocurrency while you were married – even if one spouse had no idea the other was buying cryptocurrency – it’s usually considered community property. California law requires you to divide most community property equally. An exception may be if you acquired the cryptocurrency as a gift or inheritance that was intended only for you.

There’s no guarantee on how a judge will rule, however, and no attorney can make promises about the outcome of your case. Every case is different, and while these rules on separate and community property may apply in many cases, they may not exactly apply to yours.

Do You Need to Talk to a Lawyer About Divorce and Cryptocurrency?

We can help you if you’re dealing with a divorce and cryptocurrency division. It’s our mission to help you reach a fair and just settlement, so please call us at 209-910-9865 or contact us online to schedule an appointment with an attorney.

While you’re here, you can also learn more about:

• Contested vs. Uncontested Divorce in California
• California Divorce Laws on Property Division
• How Does a Premarital Agreement Affect Your Divorce?