While it was once hard to even grasp as a concept, a growing number of couples are navigating divorces involving the ownership of cryptocurrency. If you find yourself in such a situation, it is important to discuss the cryptocurrency with your divorce attorney. In some situations, the cryptocurrency might be classified as a marital asset that must be valued and divided. Because there are various complex issues involved in cryptocurrency, it helps to understand how best to handle these assets during a divorce.
The Basics of Cryptocurrency
While some people use cryptocurrency for unlawful transactions, not everyone does. Other people view cryptocurrency as a secure and private way to make financial transactions. Other people view cryptocurrency as a form of investment.
Over the years, cryptocurrency has grown to include several digital currencies including Bitcoin, Litecoin, Ripple, Cardano, and Etherum. The currency is bought and sold on various platforms. The currency is validated by a blockchain, which is a list of secure records. If you or your spouse own cryptocurrency and acquired it during a marriage, it will be viewed as a marital asset. In these situations, there are several tips that you must remember to follow.
Avoid Deleting Anything About the Cryptocurrency
If you have any documentation about the cryptocurrency purchase, you must avoid deleting it. Instead, you must preserve evidence of the cryptocurrency purchase. At the very worst, destroying this evidence could be seen as an attempt to hide evidence from the court and you could end up facing strict penalties.
Know Where to Find Records of Cryptocurrency
It is critical to determine if cryptocurrency exists. Some methods used to establish that cryptocurrency exists includes obtaining copies of bank accounts or credit card statements showing deposits from the digital currency platform or printing out emails that contain specific details about the cryptocurrency. If you have documentation of this nature, you should promptly present it to your divorce attorney.
Consider the Tax Implications
Some people receive tax information after purchasing cryptocurrency. The Internal Revenue Service’s Notice 2014-21 states that virtual currency is to be treated as property for tax purposes and as a result is subject to capital gains taxes. These consequences should be considered when transferring and valuing assets during a divorce. The presence of cryptocurrency can often impact a person’s tax return and should be reviewed with your divorce attorney.
Learn How to Transfer Cryptocurrency
If virtual currency should be transferred during your divorce, you should make sure that the person who is receiving the cryptocurrency understands both how to access and use this asset. Otherwise, the party will not know how to make the most of this digital currency.
Contact a Seasoned Divorce Attorney
Various digital assets can be of great value. As a result, it is a good idea to make sure that issues arising from ownership of these assets are properly handled during your divorce. If you need assistance navigating these complex issues, do not hesitate to speak with an experienced divorce attorney at Vayman & Teitelbaum, P.C. today.