The Era of Cryptocurrency Divorce

Cryptocurrency divorce is a new phenomenon sweeping the nation and the globe. If you are facing these unchartered waters, an experienced family law attorney is a must.

The rise of the cryptocurrency market has seen exponential growth, which has led to the less navigated world of cryptocurrency divorce.

Crypto assets are notoriously difficult to trace and control, and the legal landscape surrounding cryptocurrencies is still full of gray areas, making them complex to handle in divorce proceedings. At Masters Law Group, we understand the complexities of uncovering hidden assets, such as cryptocurrencies.

In this blog, we’ll walk you through everything you need about crypto assets in divorce cases to ensure a fair settlement. Here’s what you should know.

Understanding Cryptocurrency 

Cryptocurrency, a form of digital currency, utilizes cryptographic technology to secure transactions and verify the transfer of assets. Initially attractive for its anonymous transactions, it has evolved to become widely used for everyday purposes such as bill payments and online purchases. According to a recent NBC News poll, approximately 20% of Americans have engaged in cryptocurrency investments, trading, or usage, showcasing its growing presence in the financial landscape. Notably, the demographic group with the highest participation comprises men aged 18 to 49.

While Bitcoin remains the most well-known cryptocurrency, the market has seen the rise of other digital currencies, such as:

These alternatives have gained popularity due to their unique features and potential for diverse applications beyond financial transactions. As the world becomes more familiar with cryptocurrency and its benefits, its integration into various aspects of daily life will likely continue expanding. Let’s look at how crypto affects divorces across the United States.

Why Cryptocurrencies Matter in Divorce

Cryptocurrencies have emerged as a noteworthy factor in financial settlements during divorce proceedings. However, with the rising popularity and widespread adoption of cryptocurrencies, more divorce cases involve these digital assets. CNBC recently reported that in 2023, crypto played a significant percentage in divorces that ranged from 20% to 50%.

As the landscape of financial assets evolves, it becomes essential for divorcing couples and their legal representatives to stay informed about cryptocurrencies and their implications in the division of assets. Failure to address these digital assets adequately during divorce proceedings may lead to complications and disagreements in determining fair settlements.

Cryptocurrencies’ decentralized nature and relative anonymity can make it challenging to track and value them accurately, complicating the delicate process of dividing marital property. Additionally, sudden price fluctuations in the cryptocurrency market can significantly affect the overall value of a couple’s assets, further complicating matters.

Asset Division In Illinois

If you suspect that your spouse may be concealing cryptocurrency assets, there are steps you can take to investigate the matter thoroughly. In divorce proceedings, fully and honestly disclosing all assets, including cryptocurrencies, is crucial. In Illinois, dividing cryptocurrency assets follows a similar process as any other marital property.

Illinois does not adhere to the community property principle. Instead, the court will distribute assets purchased, converted, or appraised during the marriage in an equitable manner. It is important to understand that equitable does not necessarily mean equal; various factors are taken into account in determining the distribution, including:

  • Age, health, and financial circumstances of each spouse.
  • Contributions made to the marital estate.
  • Obligations related to previous marriages, as ordered by the court.
  • Considerations regarding child custody.
  • Pre and post-nuptial agreements.
  • Tax implications.
  • Duration of the marriage.
  • Alimony arrangements.

If you ever find yourself uncertain about the ownership of assets, seeking legal counsel promptly is advisable to avoid any confusion or ambiguity.

Agreements on Dividing Crypto Assets

Dividing crypto in divorce cases can be challenging due to their fluctuating value. However, with careful consideration, the process can be made relatively straightforward. Here are some approaches to handle it:

  1. Simple Division: One party receives a portion of the cryptocurrency as it is at the time of the divorce.
  2. Custodial Holding: A third-party custodian receives and holds the share of cryptocurrency until the divorce is finalized.
  3. Cryptocurrency Owner Liquidation: The asset owner converts the other party’s share into cash based on the digital currency’s value on the day of the sale.
  4. Liquidation With No Claim Upon Remaining Cryptocurrency: Similar to option #3, both parties agree that the original owner retains full title to the remaining cryptocurrency.

It’s important to note that there are no loopholes in divorce proceedings concerning cryptocurrency. While courts are familiar with handling the volatility of traditional assets, cryptocurrency introduces a new level of complexity.

Work With Masters Law Group

Navigating the complexities of cryptocurrency asset division during a divorce in Illinois can be overwhelming. At Masters Law Group, we understand the intricacies involved and are here to assist you every step of the way. Our skilled attorneys, serving communities across Chicago and the suburbs of Elmhurst, Hinsdale, DuPage, and Oakbrook, offer experience and insights into the world of the crypto divorce and can help you navigate this complex process.

Whether you have inquiries about divorce proceedings or require guidance on discovering digital assets and asset division, we are ready to provide answers and support.

Contact us today to schedule a complimentary consultation and learn how we can support you through your crypto divorce.

The Impact of Divorce on Children: Supporting Their Emotional Well-being

Divorce is an unfortunate reality many families face, and its impact can be profound, especially on the children involved. While divorce can bring about significant changes and challenges for everyone involved, it is crucial to prioritize the well-being of children during this time. 

By understanding the effects of divorce on children and providing them with the necessary support, we can help them navigate this transition and promote their emotional resilience. In this blog, we will explore how to prepare for divorce and support your children. Here’s what you should know.

Understanding the Effects of Divorce on Children

Divorce can have various emotional effects on children, depending on their age, temperament, and the circumstances surrounding the separation. It is essential to be aware of these potential effects and address them proactively. Common emotional reactions exhibited by children include:

  • Feelings of sadness and loss: Children may experience a sense of grief and mourn the loss of the intact family they once knew. They may feel deep sadness and worry about the changes in their lives.
  • Anger and resentment: Children may express their frustration and anger over the divorce, often directed towards one or both parents. They may feel caught in conflicts and blame themselves for the situation.
  • Anxiety and insecurity: The stability and routine they once relied upon may be disrupted, leading to feelings of uncertainty and anxiety about their future. They may worry about their living arrangements, school changes, and how their relationships with their parents will be affected.
  • Academic and behavioral challenges: Divorce can impact a child’s educational performance and behavior. They may have difficulty concentrating, exhibit aggression, withdrawal, or act out to cope with their emotions.

Understanding the effects of divorce on children is crucial to provide them with the necessary support during this challenging time. Let’s look at how to prepare for divorce while supporting your children.

Preparing for Divorce and Supporting Your Children

Parents, caregivers, and educators support children’s emotional well-being during and after a divorce. Studies indicate that children often face significant challenges, particularly within the first year or two following the divorce. It is important to remember that each child is unique, and what may be substantial for one child may not hold the same weight for others. To navigate this, staying aware of your children as individuals is vital.

Encouraging open conversations with your child is essential. Provide age-appropriate information about the divorce and reassure them that the separation is not their fault while emphasizing that both parents love them. When they express their feelings, listen intently without interruption, allowing them to share their emotions freely.

Consistency and predictability provide stability amidst the changes. Establishing regular schedules for meals, bedtime, and other activities can help children feel secure amid the transition. This goes hand in hand with creating a safe and nurturing environment. This allows children to express their emotions without judgment further. Be a listening ear, validate their feelings, and offer reassurance during challenging moments.

Striving for amicable communication and cooperation with your ex-spouse is crucial. Shield children from conflicts and avoid involving them in adult issues. Establishing a consistent co-parenting plan that prioritizes the children’s well-being will contribute to their stability. If your child struggles with emotional difficulties during the divorce, consider seeking professional help, such as therapy or counseling. A trained therapist can guide and support children in processing their emotions effectively. Remember, seeking assistance is a proactive step toward their well-being.

Explore Divorce Mediation

Divorce Mediation is one of the best options to help your children through this life change and to encourage a harmonious relationship between you and the other parent.

Mediation is a form of alternative dispute resolution (ADR) that involves a neutral third party who facilitates communication between the parties to help them reach a mutually beneficial solution. Unlike a judge, the mediator does not make decisions for the parties; instead, they help the parties reach their agreement.

Mediation typically begins with both parties meeting with their mediator to discuss the issues at hand. The mediator then facilitates communication between the parties, helping them to identify and address their concerns. Once an agreement is reached, the mediator will draft a written contract that both parties can sign.

In some cases, mediation may not be successful. However, even in these situations, the parties may better understand each other’s positions and concerns, making future negotiations more straightforward, ultimately helping to minimize the impact on children’s wellbeing.

Working With Family Law Professionals

When going through a divorce, it is often beneficial to seek assistance from family law professionals who excel in navigating the legal aspects of separation, divorce and divorce mediation. The experienced family law attorneys at Masters Law Group can advise on the legal aspects of your divorce. We can help you understand your rights, obligations, and options for resolving any disputes, while providing valuable guidance and support. Our main goal is to ensure that your rights and the best interests of your children are protected. Here are some of the areas that can help you navigate:

  • Parenting Time: If you have children, work closely with your attorney to determine the best arrangements for child custody and visitation. Ensure that the agreed-upon arrangements prioritize your children’s well-being and best interests.
  • Mediation and alternative dispute resolution: Explore options such as mediation or collaborative divorce to help you and your ex-spouse reach mutually beneficial agreements outside of court. Your family law attorney can guide you through these processes and represent your interests during negotiations.
  • Post-divorce modifications: After the divorce is finalized, there may be circumstances that require modifications to child custody, visitation, or support arrangements. Stay in touch with your attorney to address any changes or issues that may arise in the future.

Remember, family law professionals are there to support you and protect your legal rights during this challenging time. Collaborating with a trusted attorney can help alleviate the stress associated with the divorce process and ensure a smoother transition for you and your children.

Final Thoughts

By prioritizing open communication and creating a safe and supportive environment, we can help children thrive despite their challenges. It is crucial to recognize and adapt our support to meet the unique needs of each child. At Masters Law Group, we understand the complexities of divorce and its effects on families.

With a strong emphasis on serving clients in Chicago’s Western Suburbs, including Elmhurst, Hinsdale, DuPage, and Oakbrook, we offer a range of services designed to assist parents, children, and families during difficult times such as divorce, parenting time, and the allocation of parental responsibilities.

Our dedicated team of attorneys is here to help if you need legal assistance. We will work closely with you to develop a personalized action plan addressing your needs and goals. Throughout the process, we will keep you informed with regular updates on your case.

Contact us today to schedule a complimentary consultation and learn how we can support you and your family during this challenging time.

Can Hiding Crypto from Your Ex Get You in Legal Trouble?

If you typed this article’s heading into an online search engine, chances are you’re considering hiding digital assets in your divorce case. Here’s why it’s a very bad idea.

The dramatic rise of cryptocurrency has led some spouses to hiding those digital assets during divorce settlements. In a divorce, both parties are expected to be honest about their assets, as all assets acquired during marriage are subject to division in a divorce. While property, stocks, bonds, bank accounts and 401(k)s can be easily tracked down, cryptocurrencies can be a bit more difficult. However, as it becomes more common, many lawyers are more aware of them and have started to learn the challenges surrounding them. 

Which begs the question, is it illegal to hide crypto from your ex during a divorce? 

What assets must be disclosed in a divorce? 

In an Illinois-based divorce case, it is legally required that each spouse discloses any and all assets, income and debt as part of the financial disclosure process. This also includes digital assets, such as cryptocurrencies. The issue with crypto, though, is enforceability and tracking it down if it is hidden. Regardless, spouses who fail to disclose still face legal trouble. Financial disclosures are signed under penalty of perjury so non-disclosure could lead to criminal charges. 

Tracking crypto

While there are ways to locate cryptocurrency activity, it is still difficult to discover and you could need experienced help from a Cryptocurrency experienced attorney. Older forms of crypto like bitcoin and ethereum are easier to track but other, more anonymous forms, are much harder for even experts to find. If exchanges are based in a foreign country, it can become even more difficult. However, it is still possible. Lawyers like the attorneys at Masters Law Group can grant subpoenas to get information if trades occurred in the United States. Additionally, forensic investigators or financial experts may be hired to uncover the assets.

What happens if I hide assets in a divorce? 

Hiding assets in a divorce could lead to discovery. Submitting incorrect documentation, failing to disclose assets or intentionally concealing them could lead to facing criminal charges. Perjury and contempt of court are the most common charges faced from these activities, but in extreme cases, you could pay large fines or even be forced to spend time in jail. 

Additionally, hiding assets is considered highly unethical by the court. Judges can use this information to make their own decisions relating to asset division. Oftentimes, attempting to hide your assets leads to your ex-spouse’s benefit, receiving a higher percentage of the total assets. 

Final Thoughts

Hiding assets is always a risky proposition and likely not worth it. Even though crypto is difficult to track, it’s still possible and the outcome would not be in your favor. It’s best to be honest about your assets during divorce proceedings, increasing the chances of getting your assets split fairly.

If you’re going through a divorce and are in need of legal help, Masters Law Group is here to help. Contact us today.

Identifying Crypto in Divorce

It’s National Cryptocurrency Month, a time to reflect on a fairly new asset concept that has grown increasingly popular. In this blog, we’ll cover what you need to know about cryptocurrency and how Masters Law Group can help you identify crypto in a divorce.

Cryptocurrency interest and awareness has exploded over the past five years. This increase was initially fueled by younger, techminded individuals, but recently large banks like Morgan Stanley and Goldman Sachs have invested heavily in crypto assets. This cultural phenomenon has spread, and recent numbers show that upwards of 53 million Americans are invested in crypto.

Cryptocurrency is volatile, wide ranging (think beyond Bitcoin) and can be more difficult to identify compared to other assets. Its volatility means its value can swing wildly – even in as little as hours. Cryptocurrencies are also numerous and multiplying with over 20,000 different currencies as of this year. 

What does this mean for you if you’re currently navigating a divorce? Read on to learn the steps you should take to ensure financial equality is met. 

The Cryptocurrency Basics

By this point you’ve probably heard the word “cryptocurrency” but few could define it succinctly. Let’s break the word in two to simplify things. First, cryptography – “the practice and study of techniques for secure communication.” Second, currency – “A system of money in general use.” From this we can see that the goal of cryptocurrencies is to “secure” the transaction records, creation of additional currency units and their transfer. 

What makes cryptocurrencies unique is the technology behind them – blockchain. Blockchain is what allows for the foundational security of these digital assets. What is blockchain? To keep things simple it’s a distributed ledger across multiple nodes, computers and people that creates a network and stores information. This decentralized database ensures that no one person or group can have leverage over the currency.

Identifying Cryptocurrency as a Financial Asset

The main issue when dividing cryptocurrency is the volatility we mentioned. For example, in January of 2021 Bitcoin surged over $40,000 before falling to $32,000. These valuation swings can make determining value difficult compared to more traditional assets.

Beyond this, the first step is to determine if your spouse has cryptocurrency holdings. Depending on the relationship, you may already know if these digital assets exist. If you’re unsure there are steps to take. 

Consider past conversations. Have they mentioned cryptocurrency? If so, that establishes a baseline interest that may lead you to believe they have assets in place. If you feel that they do, you would move into a discovery phase. 

First off, share this information with your legal counsel. Your attorney and their team can use this information to begin investigating. Some of the first steps they may take would be to determine if there is a physical “wallet” or a digital one. This wallet may be in the form of a hard drive that holds the cryptocurrency or in the form of an online exchange like Coinbase.

Either way, this information will be password protected. Once entry is secured, a paper trail will show itself. This information will contain transactions, the cryptocurrency holdings, conversion rate and other pertinent information. 

Once all of this information is secured, the division of the assets can be discussed.

Division and Reconciliation 

There are four basic paths that can be chosen once valuation has been determined. Let’s briefly cover these.

    1. Simple Division: As the name suggests, this would simply be a division of the cryptocurrency assets.
    2. Custodial Holding: If holding cryptocurrency is not valued, a custodian can be secured. This representative would handle the cryptocurrency transaction – into the US dollar for example – and then hold the amount until the divorce is finalized.
    3. Cryptocurrency Owner Liquidation: In this situation, the owner of the cryptocurrency (your spouse) would convert your share into US dollars. The value of the currency would be determined by the day of sale value. 
    4. Liquidation with No Claim Upon Remaining Cryptocurrency: This is similar to the option above, the difference being that your spouse would retain full ownership but would liquidate the cryptocurrency as it stands. You would not be owed any of the assets.

By working with your legal counsel, you can determine the best course of action.

Final Thoughts

Cryptocurrency is fairly new, meaning it’s often misunderstood. Its popularity means it will continue to be relevant in divorce cases into the foreseeable future.

If you’re currently navigating a divorce, and believe that you are owed a portion of cryptocurrency assets, reach out to Masters Law Group LLC today. Our skilled team has experience with digital assets and our breadth of knowledge means we can answer your questions and assist you in gaining access to what you’re owed.

Schedule a call, here today.

The Rise of the Crypto Divorce

Talk to anyone who’s gone through divorce and they’d likely say the experience was no walk in the park. If you’re facing a divorce in 2022, there’s a new asset that needs to be accounted for – Cryptocurrencies. Here’s what you need to know.

In the last few years, the cryptocurrency market has exploded. It’s hard to go a day without hearing about it in the news. But what does that mean for your divorce?

Well, if you’re dealing with a crypto-rich spouse, it can mean some serious headaches. Crypto assets are notoriously difficult to trace and control—and it doesn’t help that there are still plenty of legal gray areas when it comes to cryptocurrencies themselves. That means they’re not always easy to deal with in court cases like divorce proceedings.

When it comes to discovering hidden assets such as cryptocurrencies, Masters Law Group has your back. Here’s everything you need to know about crypto assets in divorce cases so you can make sure you’re getting what’s fair.

Cryptocurrency Basics

Cryptocurrency is a form of digital currency that uses the technology of cryptography to secure its transactions. It is designed to be used as a medium of exchange, like money, but it can also be used to transfer data securely.

One of the early appeals of cryptocurrency was that it provided the opportunity to transfer large amounts of wealth anonymously without any government or institutional interference. These days, cryptocurrency is used by some owners to take care of routine matters such as paying bills, buying goods, and others use it as collateral to obtain loans. Many others are purchasing it as a form of investment.

The most popular form of cryptocurrency is Bitcoin. Some examples of other digital currencies include Litecoin, Ethereum, Ripple, Zcash, Bitcoin Cash, Cardano, among others. 

Why is Cryptocurrency Relevant Upon Divorce?

Cryptocurrency is an asset to be considered in the financial settlement. The reality is that it is not a feature of mainstream divorce yet. This is because a large proportion of the general public still views cryptocurrency as too much of a gamble and the difficulty of identifying whether or not someone holds cryptocurrency.

However, with the current growth in popularity we can expect to see more cases involving cryptocurrencies as assets for divorce settlements. Cryptocurrency is increasingly being used as an alternative form of payment and investment, so it’s important to understand how it could be treated in your divorce case.

Looking For Cryptocurrency Assets

If you suspect that your spouse/civil partner is hiding cryptocurrency from you, there are steps you can take to investigate the matter.

First, make sure that both parties provide full and frank disclosure. This means that both parties should disclose all of their assets, including cryptocurrency. If one party suspects that the other isn’t disclosing cryptocurrency in the course of their divorce proceedings, then preliminary investigative works need to begin.

The standard disclosure process requires each party to disclose bank statements. These should be carefully examined to see if there are any transactions or proof of purchase of cryptocurrency i.e. exchanges or trading platforms. If the bank statements aren’t showing anything, then you can  request your spouse’s credit card statements. You also can make a specific request for disclosure of all apps on their spouse’s smartphone.

Agreements on Dividing Crypto Assets

The rise of cryptocurrency has created a whole new world for the courts. With its fluctuating value, crypto assets can represent substantial sums of money that are not always easy to track down. This can lead to court cases where one spouse is accused of hiding assets from their spouse, or where an unscrupulous party will try to use the anonymity of crypto assets to hide their own assets.

When a couple gets divorced, it can be difficult to determine how to divide the assets. In the case of cryptocurrency, however, the process is fairly straightforward.

  • Simple Division: You receive a share of the cryptocurrency in its current form.
  • Custodial Holding: If you decide to not set up a cryptocurrency account, you can find the custodial approach suitable. A third-party custodian can transact in cryptocurrency, receive your share and hold it until the divorce is final.
  • Cryptocurrency Owner Liquidation: The former spouse who owns the asset will convert the other party’s share to cash. The digital currency’s value on the day of sale determines how much money you receive.
  • Liquidation With No Claim Upon Remaining Cryptocurrency: This approach starts the same as #3. However, both parties have agreed in advance that the original owner of the cryptocurrency now has full title to the remaining asset and does not owe the former spouse any remaining crypto.

Regardless of whether you decide to keep your cryptocurrency or sell it off, it’s important to remember that there is no loophole when it comes to divorce proceedings. The courts are used to the volatility and fluctuating value of shares and other types of assets—cryptocurrency is a whole new phenomenon.

If you’re having doubts and suspect that your spouse is hiding crypto and don’t know what signs to look out for, you can find that information here. If you have questions about the different types of crypto and are trying to get acquainted with the market, you can find that information here.

Masters Law Group – Cryptocurrency and Divorce Lawyers

When you are facing the divorce process in Illinois and are dealing with cryptocurrency asset division, do not hesitate to call the attorneys at Masters Law Group. 

Our team of attorneys are highly experienced in dealing with Cryptocurrencies in divorce and are here to answer your questions about divorce and digital asset division.

Contact us today for more information, or to schedule a consultation.

Crypto Divorce Lawyer

Dividing assets is a standard part of any Illinois divorce case. At Masters Law Group, our skilled cryptocurrency divorce attorneys track down these digital assets and negotiate an appropriate and fair division.

While some cryptocurrencies are easily found during the discovery phase of divorce proceedings, others, such as bitcoin, can be more challenging to find, particularly when they are private. If you have an impending divorce on your hands, you need to know how to find, value and divide them.

If you or your spouse own cryptocurrency, you are going to want to make sure it is discussed with your divorce attorney. It may be a marital asset that needs to be valued and divided; but due to cryptocurrency wildly fluctuating, it can sometimes be problematic to value, and therefore split fairly.

Here’s what you need to know about handling bitcoin and other cryptos in divorce.

A QUICK RECAP OF CRYPTOCURRENCY

The use of cryptocurrency varies user to user. Some people prefer to use cryptocurrency for online purchases to ensure secure financial transactions. Others might use it simply to capitalize on discounts or rewards offered for the use of digital currencies.

The most popular form of cryptocurrency is Bitcoin. Some examples of other digital currencies are Litecoin, Ethereum, Ripple, Zcash, Bitcoin Cash, and Cardano. Digital currency is bought, sold, and traded on various platforms. Coinbase is a popular platform used for Bitcoin. Some other digital currency exchange platforms are Kraken, BitStamp, ShapeShift, Gemini, and Bisq.

Cryptocurrencies are validated by a blockchain. This refers to a list of records called blocks that are linked together like a chain. Blockchains are designed to be secure. The foundation of a blockchain is a “decentralized database.” Blockchains can include a piece of information called a hash.

It is very important to know if any parties in a family law matter have cryptocurrency. Cryptocurrency can be a marital asset eligible for division in a divorce. If you know cryptocurrency exists, it will need to be valued. Cryptocurrency has an exchange rate just like standard currency and it can be converted into U.S. dollars. There are programs on the internet that can assist with the conversion of cryptocurrency to dollars. It may be helpful to know which conversion rate program that cryptocurrency owner utilizes.

LOOKING FOR CRYPTOCURRENCY

Valuation presents the primary difficulty when two people need to divide digital currency. Cryptocurrency assets are notorious for sharp shifts in value over short periods of time.

Figuring out whether or not cryptocurrency exists is important. Have you discussed cryptocurrency with your spouse? Have you overheard them boating to their friends about their crypto wallet? Will bank account statements or credit card statements show deposits or withdrawals from a digital currency platform? Are there emails or other correspondence that contain information about cryptocurrency?

If any of these are true in your marriage or divorce, you should notify your attorney immediately. Your attorney will need to start collecting information about the cryptocurrency. Obtaining documentation about cryptocurrency can be tricky because often the point of cryptocurrency is for transactions to remain private or secure.

First, it needs to be determined if the cryptocurrency owner has a wallet and whether that wallet is online or is a physical device. The wallet will have an ID and a password for logging which can be requested in discovery. Wallets can be similar to a portable hard drive and be an actual physical item. In other instances, the wallet may just be online and through one of the cryptocurrency exchange platforms. Different steps need to be taken to preserve information from both kinds of wallets.

An owner can usually download a transaction history from his/her wallet or exchange platform. The transaction history is often downloaded as an Excel spreadsheet or other electronic document. The download contains information like a bank statement such as date, time, amount of cryptocurrency, conversion rate, balance, transaction ID, and hash information.

Most transactions will show some sort of confirmation of purchase. Often the confirmation occurs via email and serves as a receipt. The confirmation may include the conversion rate, dollar amount, and a date and timestamp. In some instances, the confirmation may identify where the cryptocurrency user deposited the funds after sale or where they withdrew the funds from to make a purchase. This can help you in the long run to identify other assets.

Cryptocurrency Division

After identifying crypto as a marital asset and considering its valuation, you have four main options for dividing the assets in  question:

  • Simple Division: In this approach, you simply receive a share of the cryptocurrency in its current form.
  • Custodial Holding: Should you not wish to set up a cryptocurrency account, you may find the custodial approach suitable. A third-party custodian who can transact in cryptocurrency receives your share and holds it until the divorce is final.
  • Cryptocurrency Owner Liquidation: The former spouse who owns the asset will convert the other party’s share to cash. The digital currency’s value on the day of sale determines how much money you receive.
  • Liquidation With No Claim Upon Remaining Cryptocurrency: This approach starts the same as #3. However, both parties have agreed in advance that the original owner of the cryptocurrency now has full title to the remaining asset and does not owe the former spouse any more of the cryptocurrency regardless of how its value may change in the future.

Choosing how to distribute cryptocurrency in a divorce requires careful evaluation. You may need to weigh advice from your divorce attorney to arrive at the best solution for your unique case.

FINAL THOUGHTS

These days, bitcoin and other cryptocurrencies are all the rage. As such, the issue of bitcoin is bound to pop up in divorce cases.

Lack of familiarity with cryptocurrency or outright discomfort with it add another wrinkle to divorce negotiations. Which is why it is important to make sure that bitcoin is properly discovered and valued in family law matters. If you know or suspect that cryptocurrency will be a part of your divorce, talk to your family law attorney immediately and put together a game plan for dealing with it. This may include a plan for how to explain how cryptocurrency works with other parties or professionals in your case.

If you are concerned about how your or your spouse’s cryptocurrency assets could affect your divorce or the asset division process, Masters Law Group can help. Our team of highly trained and experienced attorneys are here to answer your questions about divorce and digital asset division.

Contact us today for more information, or to schedule a consultation.

A Guide to Divorce and Cryptocurrency

In 2022, cryptocurrencies are playing a big role in divorces. If you’re facing a divorce and lost on how to find, value and split cryptos, here’s what you need to know. 

With the rise in popularity of cryptocurrency over the past few years, it is becoming a hot topic in many divorce cases. When it comes to dividing assets in a divorce, it can be difficult to know what to do with cryptocurrency. While there are many different types of cryptocurrencies, they all operate in fundamentally similar ways: they are digital currencies that can be exchanged for goods and services or other currencies, and many are traded on online exchanges.

This guide will give you a high-level overview of cryptocurrency and explain your options on how to deal with it in a divorce. Let’s take a look.

Cryptocurrency Basics

The rise (and falls) of cryptocurrency has been unlike anything we’ve ever seen. The market is so volatile that some have compared it to the Wild West. And yet, the demand for it seems insatiable. So what is cryptocurrency, and why are people so interested in it?

Cryptocurrency is a virtual or digital currency that can be used like real money as a medium of exchange. It is not a physical token, like a dollar bill, but is similar to an electronic payment system (think of swiping your credit card) as a way to pay for something.

Cryptocurrency “coins” are held in a digital wallet, which can be an online service, a software program, or a personal hard drive among other things. The wallet allows the owner to make secure transactions for goods and services or keep it as a type of investment. Since the coins are not issued by a central authority, like a bank or government, they are theoretically immune to inflation and other government interference.

Cryptocurrency and Taxes

When you sell or transfer cryptocurrency, it is treated as property and capital gains are taxed. You will incur a gain or loss when sold, transferred as payment for goods or services, exchanged with another crypto, and at other various scenarios.

You are required by the IRS to report gains and losses on each transaction even if the gain or loss is not material. The difference between the purchase price and sales/transfer price is what will be taxed.

If the value at the time of sale or transfer is more than the purchase price, you will incur a capital gain. If the value at the time of sale or transfer is less than the purchase price, you will incur a capital loss.

Understanding Cryptocurrency and Divorce

When you are going through a divorce, you will need to provide financial disclosures to your spouse. This includes information about your assets, income, and expenses. Cryptocurrency is considered an asset and not income. As such, it should be listed on your financial disclosures when you are going through the divorce process.

Most cryptocurrency holdings have a current value which is listed when you log into your account. The values listed are based on current exchange rates for that specific cryptocurrency to US dollars. However, values can fluctuate by a significant amount daily so it is important to keep this into consideration when using the value listed on the financial disclosures when dividing property.

How to Determine the Marital Portion of Cryptocurrency in a Divorce

Property division laws vary from state to state. A vast majority of states are equitable distribution states where assets are divided fairly but not always equally.

Illinois has taken steps to protect individuals who have invested in cryptocurrencies by allowing them to be counted as part of their overall net worth during divorce proceedings. In Illinois, all property held by either party is presumed marital property unless it falls under an exception such as being acquired before the marriage, being a gift or an inheritance.

Dividing crypto in Illinois is similar to the division of any other assets. Illinois is not a community property state, which means the court will split assets purchased, converted or appraised throughout the marriage in an equitable manner.

How Masters Law Group Can Help

When it comes to modern-day divorce cases, Masters Law Group has you covered on all things crypto. If you’re facing a divorce and suspect that your spouse is hiding crypto (and don’t know what signs to look out for), you can find that information in our recent blog here. If you have questions about the different types of popularized crypto, you can find that information right here.

Masters Law Group is here to help you through this stressful time. It’s important to consult your attorney as soon as you find any hidden cryptocurrency and discuss everything you know about the assets such as the type of crypto, the date of purchase and its appreciation. Gather any documents and records you may need in order to get your affairs in order.

Our team of attorneys are highly experienced in dealing with Cryptocurrencies in divorce and are here to answer your questions about divorce and digital asset division.

Contact us today for more information, or to schedule a consultation.

 

The Illinois Divorce Process and Cryptocurrencies

Cryptocurrencies are a new form of currency, rapidly gaining popularity and media attention across the globe. It’s estimated more than 20 million Americans may own cryptocurrency, and how to split holdings has become a growing concern in divorce settlements. 

The problem for divorcing couples is that the division and valuation of cryptocurrencies can be just as difficult as dividing up the equity in a home.

Throughout our cryptocurrency series we have answered many questions regarding different types of crypto and where you can find hidden assets. In a world where cryptocurrency is increasingly accepted as legitimate, it’s only natural that Masters Law Group’s experienced attorneys would know how to handle it. Here’s a quick look at how the state handles the issue at hand.

Disclosing Bitcoins And Cryptocurrencies in an Illinois Divorce

It’s important to understand how the state of Illinois divides and separates cryptocurrency assets. Illinois has taken steps to protect individuals who have invested in cryptocurrencies by allowing them to be counted as part of their overall net worth during divorce proceedings.

However, there are some stipulations involved in this process. Any money received from selling cryptocurrency is considered to be liquidated property and thus should not be counted as part of the overall net worth of an individual during a divorce settlement.

This process may trigger a couple of questions. How would you verify Bitcoin holdings? Would you print a screen grab from an online platform where you hold Bitcoin or other cryptocurrencies? Would you entrust your ex-spouse or their attorneys with the password to your accounts? Coin exchange companies such as Coinbase will issue a 1099-K each year if there have been $20,000 or more in exchanges of cryptocurrency.

Typically, the opposing party’s attorney will go through the process of cleaning up the financial affidavit and ask you for these documents to verify the claimed assets. The opposing party’s attorney will issue a “Notice To Produce” asking for copies of statements for your 401k, bank accounts, etc. If you have access to those documents, you must provide them a copy of those documents if they request it. Failure to do so can result in a finding of contempt of court.

The Illinois Department of Revenue requires 1099-K forms to be submitted electronically to Illinois when four or more separate transactions exceed $1,000 or if you are required by the IRS* to electronically file Forms 1099-K.

Essentially any 4 crypto-currency purchases, sales or trades will trigger a 1099-K in Illinois and the cryptocurrency holder will have those 1099-K as part of their standard tax packet. If your spouse will not fully disclose their cryptocurrency holdings, you may have to turn to an expensive third party to discover any additional holdings.

How Do You Divide Crypto in Illinois?

After determining the actual existence and quantity of your spouse’s cryptocurrency, the next step in the analysis is to figure out what portion of the cryptocurrency is marital. In Illinois, all property held by either party is presumed marital property unless it falls under an exception such as being acquired before the marriage, being a gift or an inheritance.

Typically, if both parties agree to the settlement they might have to include a formula for the volatility of the crypto. Once the judge approves of the formula, the price of that cryptocurrency in the martial estate becomes more foreseeable. 

Dividing crypto in Illinois is similar to the division of any other assets. Illinois is not a community property state, which means the court will split assets purchased, converted or appraised throughout the marriage in an equitable manner. It’s important to note that when it’s split equitably, it doesn’t always mean equal. Here are a couple factors that determine equitable distribution:

  • Age, health, financial circumstance of a spouse
  • Financial contributions to marital estate
  • Court-ordered obligations related to previous marriages
  • Child custody considerations
  • Prenuptial and postnuptial agreements
  • Tax Concerns
  • Marriage Duration
  • Alimony provisions

If you are ever unsure about the ownership of your property, you should consult legal counsel immediately in order to avoid any uncertainness. Lastly, if both parties agree to the settlement they might have to include a formula for the volatility of the crypto. Once the judge approves of the formula, the price of that cryptocurrency in the martial estate becomes more foreseeable.

The volatility of the price of these assets makes it very difficult to adequately value at the time of the divorce. Discovery and final negotiation of a divorce can sometimes take months and in that time a cryptocurrency could double or halve in value. A cash out of the cryptocurrency before the finality of the divorce is probably advised to finalize the marital value.

How Masters Law Group Can Help

When it comes to modern-day divorce cases, Masters Law Group has you covered on all things crypto. If you’re facing a divorce and suspect that your spouse is hiding crypto (and don’t know what signs to look out for), you can find that information in our recent blog here. If you have questions about the different types of popularized crypto, you can find that information right here.

Masters Law Group is here to help you through this stressful time. It’s important to consult your attorney as soon as you find any hidden cryptocurrency and discuss everything you know about the assets such as the type of crypto, the date of purchase and its appreciation. Gather any documents and records you may need in order to get your affairs in order. 

Our team of attorneys are highly experienced in dealing with Cryptocurrencies in divorce and are here to answer your questions about divorce and digital asset division.

Contact us today for more information, or to schedule a consultation.

The Dogecoin Divorce

Industry groups estimate more than 20 million Americans may own cryptocurrency, including Dogecoin. Now many are left wondering how to split holdings in divorce settlements. 

Divorce is one of the most stressful events that a human can endure. It can be physically, emotionally, and financially draining. Especially when you’re dealing with the division of your assets. Now that some of those assets have gone digital for an increasing number of people, an already complicated process stands to get more difficult.

Cryptocurrency is a digital form of payment that can be used to purchase goods or services online. Every transaction is done online and tracked via a highly secure ledger called a blockchain. You might have heard of Dogecoin, a crypto that has made big news lately for its wildly fluctuating value. There are more than 10,000 unique publicly-traded cryptos, with more being added every day.

In the sixth part of our Cryptocurrencies and Divorce series, we discussed the situations in which cryptocurrency can be found during the divorce settlement process and also if it can be lost within the settlement. While tracking down the funds isn’t an easy process, our third part of the series will give you a little more insight on the Cryptocurrency Dogecoin Assets.

With all of these forces at play during a divorce, it’s best to be prepared for whatever the outcome may be and hiring a family law attorney well-versed in cryptocurrencies is always an advantage. Here’s what you need to know about Dogecoin and Divorce.

What is Dogecoin?

Dogecoin originated as an alternative to traditional cryptocurrency such as bitcoin. Both the name and logo were based off of a meme that went viral. Dogecoin is intentionally abundant which is different in comparison to bitcoin which is scarce. In 2021, Dogecoin became one of the biggest cryptocurrencies in the market. 

Since Dogecoin was created to be abundant, miners were able to produce more by the minute. DOGE was based on supply and demand, and that surged enomurlsey which inturn has given it a higher value- due to reddit threads popularizing this cryptocurrency. 

Fast-rising DOGE prices in 2021 attracted media attention due to social media memes, which created a cycle that attracted more investors and further increased prices. Whenever an asset sees such dramatic gains, people tend to have a fear of missing out, which brings waves of new traders into the fold. 

It’s important to note that DOGE remains a highly volatile cryptocurrency. Like any investment there is no guarantee that it will go up or down in the future.

Challenges of Crypto & Divorce

The rising popularity of cryptocurrency for investors means that it is becoming a factor in divorce settlements. Many spouses are attempting to hide their money inside crypto to keep it from being divided between themselves and their future ex-partners.  

​​The costs associated with uncovering hidden cryptocurrency assets can also be substantial. Before moving forward with a court order to uncover potential hidden crypto assets, a spouse and their divorce lawyers may want to make sure that they are relatively certain about the outcome. 

One of the biggest obstacles for divorcees is simply a lack of understanding about what crypto is and how it factors into the traditional financial portfolios of divorcing spouses. The amount of money involved is also a consideration. People with a few hundred or even a few thousand dollars in undisclosed cryptocurrency are rarely the proper target of such an investigation. An experienced family law attorney may help a spouse concerned about crypto assets decide whether or how to pursue a court order and full forensic investigation. 

Final Thoughts

Living in a digital age like we do today, where things become meme-able by the second due to social media, it’s important to stay in the know. That’s why Dogecoin, Bitcoin, and other cryptocurrencies are increasingly expected to pop up in a divorce settlements today and in the future.

Because splitting digital currency may be more complex than traditional investments, such as stocks, bonds, or mutual funds, it is important to be prepared and make sure that crypto is properly discovered and valued in family law matters. If you know or suspect that cryptocurrency will be a part of your divorce, talk to your family law attorney immediately and put together a game plan for dealing with it. 

Our team of award-winning attorneys are highly experienced in dealing with Cryptocurrencies in divorce, and are here to answer your questions about divorce and digital asset division.

Contact us today for more information, or to schedule a consultation.