Introduction to Dealing with Cryptocurrency in Divorce
Cryptocurrencies are currently growing at a much faster rate than they were many years ago. Although it was disregarded when it was first introduced, it has recently received more publicity, attention, and demand. It has now proven to be a valuable asset, one that’s here to stay.
While there is a lot to say about cryptocurrency, this article discusses cryptocurrency in our personal life, and in this case, divorce.
If you or your spouse owned cryptocurrency during your marriage, then you should know how it will be addressed if you are divorcing. Will it be regarded as income or an asset? This is something that you need to discuss with your lawyer during the divorce process. The cryptocurrency might be classified as a marital asset that must be divided between both parties.
How do you go about dealing with cryptocurrency in your divorce? We discussed with some crypto paper writers, and here are eight tips that we gathered.
Don’t delete anything that relates to crypto
It’s a real temptation to delete all proof that you own cryptocurrency to have more assets after the divorce. However, once this is found out, it might become a more serious case of destroying potential evidence during the proceedings. So you might have to face the legal consequences of hiding the funds or information about your cryptocurrency. This means that you might lose your access to the account if the court can establish that you delete or close the account for this reason.
Finding the cryptocurrency
Knowing whether or not your partner owned any cryptocurrency is a crucial part of the case. You are the one who can provide your lawyer with the most information. Have you had any such discussions with them? What about their credit card and account statements? Does it show any withdrawals or deposits into a crypto trading platform? Do you even have an idea if cryptocurrency existed in your marriage?
You must be able to provide your lawyer with all of this information to help them make a solid case.
Check their purchase history.
Setting up a crypto wallet doesn’t take much from the user. In many cases, all that they need is their email. So, there are no sure means to find out if they have a crypto wallet that they are hiding from you, and you have to wait till they make a purchase first. It could be that they make other people pay for their online purchases on eBay, Amazon, and other e-commerce stores and pay them back with cryptocurrency. It is impossible to go through the transactions between two crypto users, but you can still look out for their internet purchases.
Get informed about the crypto transfer.
It might appear that you have it all sorted if you already know everything that you need to know about the asset. However, you could face several hurdles still that you need to prepare for. For example, you must be able to access the digital currency and use it as well. So it isn’t just lying there in the wallet. Also, you need to find out about the potential tax liabilities that might come with you receiving this digital currency. For instance, if there’s going to be a buyout and cryptocurrency will be used, both of you have to agree on the number of coins, date and time of conversion, etc.
Get information about taxing.
Although you can transfer coins anonymously and with ease, it doesn’t mean that you are exempted from tax payments on those coins. This is because cryptocurrencies are now being treated as properties for tax. This subject it to capital gain tax. The IRS even sends letters out to crypto owners that have done one crypto transaction at least, informing them of an obligation to pay tax. So if you receive crypto as part of your divorce settlement, it might affect your taxes, even the one for the past years as well.
Request for bank statements
One way to find out if your ex is hiding digital currency is if they are unable to provide their credit statement and bank statement. If you stop receiving these statements in your mail after a while, then you should go to the bank and request copies of them. If there are other activities that you find suspicious such as changed passwords to the joint account, notify your attorney if you find such anomalies, especially if you are locked out of financial accounts.
Decide on percentages
You can split cryptocurrency assets with your spouse in 3 different ways. You can split just the coins alone, and this might favor you because it doesn’t include fees for you to pay after transferring funds between accounts. However, the volatility of this coin means you might not get as much as you want. In order to prevent fluctuation, some others cash out on the coins. This might come with a 2% few, though. Also, you might choose to keep the coins and find other ways to compensate your ex, like giving them a more significant share of other assets.
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Work with good lawyers.
Getting all the information that you need about cryptocurrency in divorce is essential. However, it’s even more critical to work with lawyers worth their salt. Open yourself up to more information and get the legal protection that you need. They’ll inform you of everything of the legal obligations that you and your spouse have to fulfill. Divorce is quite a strenuous affair, so you need good lawyers to navigate these. Your partner would be getting one too, so you almost don’t have a choice.
Getting a divorce takes a lot of processes, but if cryptocurrency is involved, it’s an even longer process. Understanding how to deal with this and find your way around this asset will likely work to your advantage during the divorce process.