Cryptocurrency and Your Divorce
Cryptocurrency is becoming an increasingly common form of investment. Some people who bought crypto are now sitting on the digital equivalent of a large pile of cash—but what does that mean when you’re getting divorced?
As always, when you choose divorce mediation, you and your ex can come to an agreement on how to divide property. However, it’s still important to understand what your rights and obligations would be if you litigated the divorce. Here’s a quick overview of how cryptocurrency could affect your divorce.
Cryptocurrency and divorce
Cryptocurrency is considered an asset rather than income. When you divorce—whether you choose mediation or litigation—you’ll need to list your crypto on your financial disclosures. However, because the value can vary day-to-day, it can be difficult to determine how much the asset is worth.
New York is an equitable distribution state, which means that if you have to go to court, your property will be divided “fairly” instead of a strict 50/50 division.
When you’re dividing crypto during a divorce, you have three options: transfer, cash-out or valuing for offset.
The transfer option has the owner spouse transfer a portion of their cryptocurrency to the other spouse’s electronic wallet. Cashing out can be accomplished by the owner spouse cashing out the other spouse’s portion and transferring it to them, or the owner spouse can transfer the cryptocurrency and let the other spouse cash it out on their own. Finally, valuing for offset allows the couple to place a value on the cryptocurrency, and the other spouse can receive another asset of similar value instead.
When you’re considering what to do with your cryptocurrency, think about the type of crypto, your personal risk tolerance and how it might affect your tax liability. These may affect which option(s) you choose. No matter how you choose to divide the crypto, keep detailed records to protect yourself and your assets.
Divorce mediation empowers couples to decide how they’d like to divide assets. Contact the seasoned Long Island divorce meditators at Solutions Divorce Mediation to get started.