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.
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:
- Simple Division: One party receives a portion of the cryptocurrency as it is at the time of the divorce.
- Custodial Holding: A third-party custodian receives and holds the share of cryptocurrency until the divorce is finalized.
- 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.
- 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.