It seems that one cannot go a day without hearing something about cryptocurrencies. The most popular one is Bitcoin, but there are hundreds of other cryptocurrencies in circulation throughout the world. And, as they become mainstream investments, it is no wonder they are becoming part of the property division process.
At the outset of a divorce, the court endeavors to get an accounting of an entire marital estate, including the family’s crypto assets. At that time, the crypto asset has a dollar value. However, that next day, the dollar value could be much different, and a few years later, it could be incredibly different. For example, think about a divorce that started in 2017 with only a few Bitcoins, and that was set to culminate just a few years later. Those few Bitcoins could now be the most valuable asset in the marital estate.
New medium for hiding assets
Prior to off-shoring funds, like stashing cash and assets in foreign accounts, the only way to hide cash was to physically hide it. Crypto, in a way, can be used in much the same way. Unless the crypto is acquired on a major exchange, it is largely anonymous and unregulated. And, these digital assets can be downloaded into a physical hard drive that can be as small as a USB stick.
Of course, this means that divorce attorneys routinely have to hire forensic investigators to track down these assets. But, there have been stories of spouses absconding to other countries with these crypto hard drive wallets worth millions.
Forensic investigators not always a wise expense
Unless one is fairly certain that a spouse has crypto and a significant amount, a forensic investigator may be an expense that does not pay for itself. This is because some crypto is now worthless, held in a defunct exchange or trapped on an unopenable hard drive crypto-wallet.
High asset divorces
A key takeaway is that it is so important for both spouses to be involved in the marital estate. If only one spouse controls 100% of the funds, the other spouse should at least, occasionally take a look at the various accounts. This is not just in case a divorce occurs, but also in case there is a death. Many crypto accounts are virtually impossible to track down when someone dies.