Cryptocurrency during the property division process

On Behalf of | Jan 25, 2022 | Divorce

Cryptocurrency represents a new angle for individuals to invest their money. These encrypted, speculative assets allow you or your spouse a secure method of saving, transferring and even growing your investment.

Like any asset in a divorce, the courts might divide a sum of cryptocurrency in half between you and your spouse. They may also split it so one spouse gets an equivalent amount of assets in exchange for the other separating with the full wallet of cryptocurrency. Cryptocurrency presents a couple of tricky hurdles to face in the realm of property division.

Taxing an encrypted currency

As a market, cryptocurrency now has the eyes of governments watching closely and more states have considered laws to regulate or report income generated from it. According to CNN Business, businesses must report any cryptocurrency transactions over $10,000 to the IRS. Not only that, gains from crypto investments may elicit capital gains taxes. If you or your spouse purchased cryptocurrency five years ago, its value today may receive scrutiny in court.

Dividing a changing value

The value of cryptocurrency shifts, sometimes dramatically, just about every week. In a divorce, this makes it tricky to assume its value. You might come away with $200,000 worth of assets while your spouse leaves with that much in cryptocurrency. What happens if that cryptocurrency doubles in value the month after the courts finalize your divorce? There may or may not be a window to appeal to reconsider a divorce order.

No matter what you and your spouse possess, it is important to lean on your resources and explore every option at your disposal to divide your high-value marital assets as fairly as possible.