If you and your spouse own cryptocurrency, it is important to understand how the asset can be divided during a divorce. Continue reading and work with a knowledgeable Bergen County property division lawyer today for more information.
What is Cryptocurrency?
Cryptocurrency is a digital currency that is secured by cryptography, the process of hiding or coding information to maintain security. Cryptocurrency operates without a central authority like a bank. Instead, it uses a digital ledger called a blockchain to record transactions.
Cryptocurrency, or crypto, generally operates the same as cash or credit cards, and can be used for internet-based payments. Some of the most common types of cryptocurrency are Bitcoin, Ethereum, Tether, Ripple, Litecoin, and XRP.
Is Crypto Marital Property?
In New Jersey, assets are divided during a divorce based on equitable distribution, the process of splitting property based on what is fair and reasonable, not what is equal. Marital assets are divided after evaluating each spouse’s income, earning capacity, contributions made to the marriage, the length of the marriage, and more.
Marital property is any asset jointly owned by both spouses. Any property acquired during the marriage is considered marital property. Separate property owned by one spouse can also become marital property if marital funds were used to maintain it, the other spouse contributed to it in some way, etc.
Cryptocurrency can be considered marital property if it was obtained during the marriage. Crypto that was owned before the marriage may be categorized as separate, but any increase in value that occurred during the marriage will be subject to equitable distribution.
How is Cryptocurrency Divided During a Divorce in NJ?
Because cryptocurrency is decentralized and can be anonymous, it can be difficult to trace and value. This can make the process of dividing crypto extremely complex during a divorce. However, in general, cryptocurrency is treated just like any other type of property during asset division.
First, the cryptocurrency must be valued. This can be difficult as cryptocurrency prices fluctuate often and dramatically. However, the court will decide to use the value of the asset on a specific date, like the day the divorce papers were filed or the date of the trial.
Any cryptocurrency that is considered marital property will be split between the parties based on what is fair and equitable. However, cryptocurrency can be easily hidden. Full financial disclosure is a major part of property division, so it is important that all assets are found during the discovery process.
The court has several options when dividing cryptocurrency. For example, the court can require one spouse to transfer a portion of the currency to the other via an online wallet. They could also offset the value of the crypto with another asset, allowing one spouse to maintain ownership of the cryptocurrency and granting the other spouse the equivalent value in cash or some other piece of property. Another common method is to sell the cryptocurrency to liquidate the value and divide the proceeds between the spouses.
For more information, work with a skilled divorce lawyer today.
