Dividing Bitcoin During Divorce

 Posted on August 13,2018 in Complex Property Litigation

Although Bitcoin is a relatively new type of currency, it is already playing an important role in the finances of many couples. Bitcoin, which is often referred to as cryptocurrency because it has no physical form, is not controlled by any government agency but is maintained in virtual accounts. Despite these major differences between virtual and standard currency, Bitcoin can be distributed during the property division process as if it were any other asset. For help ensuring that your own virtual assets are fairly and properly divided upon divorce, please contact our high asset divorce legal team today.

What Is Bitcoin?

Bitcoin is essentially a line of computer code that holds monetary value and is otherwise known as digital currency. While bitcoin can be stored offline on the owner’s computer hardware and so can be kept relatively safe, this digitization also means that it is easier for a spouse to transfer or hide them without the other spouse’s knowledge. The best way to ensure that your spouse is not hiding assets in this way is to take note of any conversions of real marital assets, like the contents of a bank account, into digital Bitcoin, which should leave a paper trail. Although it can be difficult to establish ownership of these types of assets, this is one of the most effective methods of ensuring that marital property that has been converted into digital currency will be divided appropriately.

Equitable Distribution of Bitcoin

Texas is an equitable distribution state, which means that, upon divorce, a couple’s marital assets must be divided equitably and fairly. Placing a value on assets is an important part of this process, especially when it comes to stocks, bonds, and virtual currencies, all of which fluctuate in price. Generally, judges will determine the date on which these types of assets will be valued, which could be the date that the couple filed for divorce, the date that the spouses signed a mediated agreement or the date that the Bitcoin was actually distributed.

At this point, the parties, or a judge if the couple cannot come to an out-of-court agreement, will decide how the couple’s Bitcoin holdings will be divided. In many cases, one party will receive the entirety of this type of asset, while the other will receive an asset of equivalent value. Alternatively, the virtual currency could be divided equally or could be sold, at which point, the proceeds would be divided between the parties. Finally, one party could retain possession of the Bitcoins as an investment and then agree to split the proceeds of any future sales.

Call Our Legal Team Today for Help

If you believe that your spouse has access to undisclosed virtual currency, please contact Powers Kerr & Rashidi, PLLC to speak with a Leander dedicated high asset divorce attorney about your concerns. We are eager to assist you today.

Sources:

http://fortune.com/2018/02/26/bitcoin-divorce/

https://www.huffingtonpost.com/david-centeno/why-where-you-divorce-mat_b_3824647.html