An issue that is coming up more often for divorcing couples is how to divide the cryptocurrency. Unfortunately, it often seems that one spouse may have acquired this asset without the knowledge of the other spouse. This behooves their attorneys to be certain each spouse reveals all assets, including cryptocurrency.
Cryptocurrency Must be Valued
One problem that arises in a divorce is that the value of the cryptocurrency must be determined. As with any investment to be divided the original acquisition price must be tracked. The value of the cryptocurrency at the time of purchase and the value as of the separation date are compared to determine the community property value.
The separation date is generally the date used to value property and determine how to divide the community property asset. However, the couple may agree on a different date for the valuation.
Some cryptocurrencies are more valuable than others. Some fluctuate in value every day. This makes the valuation date very important when determining what the value of the asset is.
Spouses are Required by Law to Reveal All Their Assets During the Divorce Process
California law imposes upon each spouse a fiduciary duty to the other. This means they must be honest with each other and follow the standard of dealing with each other fairly and in good faith during the divorce process. When one party fails to comply with this duty, California law allows the family law court to impose penalties on the breaching party.
There have been cases in the news about a spouse failing to disclose lottery winnings. When the other spouse discovered it and brought it up in court, as a punishment to the spouse who fraudulently hid the lottery winnings, the court awarded the entire winnings to the other spouse. This indicates that the courts will punish spouses who hide an asset during the divorce process.
Should the Spouse who did not Purchase the Cryptocurrency Keep Their Share?
The spouse who did not purchase cryptocurrency, but now owns it will need to educate themselves about their choices: to stay in cryptocurrency or to convert it to a different asset.
That spouse can hire an expert to provide them with advice. One thing they can look at is the original acquisition cost and determine if there has been a loss or a gain. They can then decide if they want to keep it and, if so, manage it themselves or hire someone to help them with that.
For more information on dividing cryptocurrency during a divorce, contact us at Heberger & Company, an Accountancy Corporation.
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