Cryptocurrency is changing the way we think about money—and it’s now reshaping divorce proceedings. Digital currencies like Bitcoin and Ethereum bring their own set of challenges when it comes to dividing assets between spouses. In New York divorces, these digital assets are treated as property, but dividing them fairly requires careful planning and expert guidance.
How Are Digital Assets Divided in a New York Divorce?
The state of New York follows the principle of equitable distribution when dividing marital property in a divorce. This means that all marital assets must be divided fairly—not necessarily equally.
In determining how cryptocurrency is divided, the court must first decide whether it is marital or separate property. These classifications play a significant role in equitable distribution:
- Marital Property: Cryptocurrencies acquired during the marriage are typically considered marital property, regardless of which spouse purchased or held them.
- Separate Property: Cryptocurrencies owned before the marriage or acquired as a gift or inheritance may be considered separate property. However, if these assets have been commingled—for example, if they were used for joint expenses—they may lose their separate designation.
Classifying cryptocurrency is the first step, but the process of uncovering and valuing these assets adds another layer of complexity.
Challenges With Divorce and Cryptocurrency
As cryptocurrency becomes more prevalent, its unique features create significant hurdles during divorce proceedings. Here are common challenges to be aware of when it comes to divorce and cryptocurrency:
Identifying Hidden Cryptocurrency Holdings
One of the most significant challenges when looking at divorce and cryptocurrency is uncovering assets that a spouse may attempt to hide. The decentralized and anonymous nature of these platforms allows individuals to move or store digital assets without traditional financial institutions, making them harder to detect. Unlike bank accounts or stocks, cryptocurrency holdings don’t always appear in standard financial records, such as tax returns or bank statements. This lack of transparency creates opportunities for concealment, requiring specialized tools, forensic expertise, and legal discovery methods to ensure all digital assets are identified and accounted for in the divorce process.
Valuing Cryptocurrency for Divorce Settlements
Valuing these digital assets can be tricky, because its price often changes quickly, sometimes within a single day. In New York, courts typically rely on the date of filing or the date of trial to set the value of assets, but with cryptocurrency, it might be more beneficial to choose the date of distribution or date of settlement as a valuation date.
Key factors to consider when valuing cryptocurrency include:
- Market Price: The current market value of each cryptocurrency at the time of valuation.
- Exchange Fees: Costs associated with converting cryptocurrency into traditional currency.
- Tax Implications: Potential tax liabilities incurred from liquidating digital assets.
Using the right strategies and working with experienced professionals is essential for navigating divorce and cryptocurrency in New York. This approach ensures that these valuable digital assets are identified, accurately valued, and divided fairly and equitably.
Protecting Your Financial Interests in a Cryptocurrency Divorce
Safeguarding your financial future with divorce and cryptocurrency requires careful planning and the right support. Here’s how to ensure your digital assets are handled fairly:
- Hire a Knowledgeable Attorney: Work with a lawyer experienced in divorce and cryptocurrency in New York to ensure all digital assets are identified, valued, and divided properly.
- Collaborate with Financial Experts: Forensic accountants and blockchain specialists can uncover hidden holdings and provide accurate valuations.
- Maintain Detailed Records: Keep track of all digital asset transactions, including purchases, sales, and transfers, to support transparency during the divorce process.
- Consider Tax Implications: Cryptocurrency is subject to capital gains taxes when sold or transferred. Plan ahead to minimize potential liabilities.
- Account for Volatility: Work with your team to address fluctuating digital asset values and ensure a fair settlement, even in a volatile market.
Taking these steps and working with trusted professionals can help protect your financial interests and navigate the complexities of divorce and cryptocurrency with confidence.
Why Expert Guidance Matters in Cryptocurrency Divisions
Navigating the complexities of divorce and cryptocurrency in New York requires experienced legal counsel. At Brian D. Perskin & Associates, we specialize in handling high-net-worth divorces, including those involving digital assets. Our team understands the nuances of identifying, valuing, and dividing digital assets, ensuring your financial future is protected.
Whether you’re concerned about hidden cryptocurrency assets or need guidance on equitable distribution, we’re here to help. Contact us today to schedule a consultation and take the first step toward securing the fair outcome you deserve.