If divorce becomes a reality, cryptocurrencies purchased during a marriage, including bitcoin, ethereum and litecoin, are typically considered marital assets instead of income. As such, they should be listed on financial disclosures.
Crypto holdings have become increasingly present in divorce proceedings. They can be challenging to find when unscrupulous spouses use them to shield their net worth and lower the value of the marital estate. Moreover, dividing these assets can be complex even when fully disclosed.
Crypto hunters are more prominent in divorce cases
If you are thinking about or undergoing a divorce and have a high-earning spouse who never seems to have any money, that may be a red flag that they are hiding assets. In a recent case, a New York woman became suspicious of her spouse’s lack of tangible assets even though he earned more than $3 million annually. A forensic accountant discovered the husband’s crypto wallet containing a dozen bitcoins worth $500,000.
Cases like this are becoming more common, especially among high-tech savvy spouses. Crypto has become another way for some bad actors to hide marital assets. Some of the others are:
- Stashing cash in a safe deposit box or around the house
- Buying expensive items that are easily overlooked
- Underreporting income on tax returns
- Transferring assets to friends, family members or children
- Deferring salary or bonuses
- Creating phony debt
It’s crucial to your financial future to pay attention to clues. While it may be difficult to uncover assets, it’s not impossible.
Valuing crypto assets
Virginia is an equitable distribution state, meaning marital assets are divided “equitably.” That doesn’t necessarily mean each spouse will receive 50%, although that is frequently the case. Hiding assets through any means in a divorce proceeding not only jeopardizes that equity but is unethical and illegal.
Even when properly disclosed, valuing bitcoin or other cryptocurrencies can be challenging due to their volatility. There are also tax implications to consider depending upon how they are divided. Keeping a sharp eye on your financial situation is a good first step for protecting your future. Getting experienced legal guidance for discovering and dividing these sophisticated assets is also advisable.