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How do you divide cryptocurrency during a divorce?

On Behalf of | Jan 12, 2022 | Divorce |

When it comes to marital assets, many couples face challenges when dividing a cryptocurrency investment during a divorce. As a new form of investing, there are still lots of questions about determining value, then establishing how much each spouse should receive within the divorce agreement.

Because of these complexities, it is crucial that you enter the divorce process with as much information as possible. Here are a few key points to keep in mind about cryptocurrency and divorce.

Asset transfer

Crypto holdings are well-known for their security. As a result, investors receive a unique password that allows them to access funds. If the court awards one spouse half the proceeds, that spouse must gain access to the password. This can lead to several issues, from concerns about a third party breaching the funds or one spouse withdrawing all funds without the other knowing. When sharing passwords, couples must establish certain ground rules regarding access to avoid possible issues.

Crypto value

The value of the investment is another important factor to consider. Regardless of today’s value, the volatile nature of cryptocurrency means that the value will vary greatly over the weeks and months. While you must still decide how much each spouse receives from the proceeds, you must also consider how to handle changes in value. Many couples include a clause in their divorce agreements that stipulates a percentage fluctuation that triggers a change to the asset division plan.

Taxes

A substantial investment can also come with a hefty tax obligation. In this case, the divorce agreement should also feature directions regarding each party’s tax obligation and how much responsibility each person holds when it comes to the tax bill.

While complex, it is possible to navigate these issues effectively and efficiently. Remain calm and level-headed, and make decisions in your best interest, regardless of your emotions.