Industry groups estimate that more than twenty million Americans may own cryptocurrency. Cryptocurrencies are quite easy to purchase; investors can purchase digital assets through companies such as, PayPal, Cash App, Robinhood, and Blockify. Yet, these new assets are not simple during divorce settlements.
The nature of cryptocurrency makes it tough to split between parties’ during divorce cases, due to it being hard to solidify the asset’s worth. Sold crypto gains or losses are filed like stock, yet many firms only send out the gross proceeds of the Crypto asset sales. Therefore, financial advisors are leaving the investors to figure out their own cost basis, which complicates whether the crypto should be defined as a marital asset. When filing any asset as unpredictable as Bitcoin, clients, attorneys, and financial experts should ensure the marital balance sheet is updated before any financial agreement becomes concrete. A plausible way to compensate the rapid changes in the digital currency is to add a volatility formula into the divorce contract.
Tax impacts on sold cryptocurrency can halt divorce cases as well. When crypto is sold during a marriage, the spouse will be subjected to long-term capital gain taxes. If a couple decides to file taxes jointly and one spouse decides to sell their digital asset while the other is unaware of the transaction, the unaware spouse is at risk to be inquired by the IRS. Having cryptocurrency in your financials can affect your tax return or effect past tax years which can complicate the divorce. It is important to make sure your lawyer is aware of your crypto’s existence to diminish said risks.
Another new problem is transferring the currency from one spouse to another. Investment companies are familiar with splitting assets during divorce settlements, but with the foreignness of crypto those companies may not be able or feel comfortable to do so. The best way to sort out a cryptocurrency transfer would be to hire a financial professional.
Kiswani Law attorneys are well versed in working with financial professionals such as accountants and experts to ensure that the division of a marital estate is possible and presented to the courts if necessary.
Call Kiswani Law today to discuss your divorce case and how your marital estate may be allocated and divided.