Although cryptocurrencies were viewed as nothing more than a gimmick or a passing fad back in 2008, they have proven that they are here to stay. Nowadays, pretty much everyone knows about Bitcoin and at least a handful of other currencies, even if most people can’t really understand or explain how cryptocurrencies, or blockchains for that matter, actually work. Currently, there are over 3,000 altcoins out there, which is a staggering number that just goes to show how important cryptocurrencies really are.
To top it all off, Bitcoin accounts for $6 billion daily transactions alone, which proves that more and more people are getting into the cryptocurrency game. But, what we’re here to talk about aren’t actually the pros and cons of cryptocurrencies, but rather how they integrate into our daily lives. More specifically, we’re going to talk about how you should go about dealing with cryptocurrencies in your divorce. Even though digital, they can be turned into actual money, and as such, they represent assets that need to be divided.
With that in mind, let’s take a look at what you should pay attention to if that happens.
- Do Not Delete Anything Cryptocurrency-Related
In order to keep more assets for yourself in the divorce, you might be tempted to delete proof of owning cryptocurrency yourself, or perhaps even close your accounts. However, seeing as this could be viewed as potential evidence during the divorce proceedings, you could face legal consequences for trying to hide or delete information about your cryptocurrency accounts, or the funds themselves. Depending on the case, such actions could be characterized as the destruction of evidence. Also, you could lose access to your accounts in case the court decides the account was closed for a negative purpose.
Since you will probably be using your Bitcoins or any of the altcoins to pay for goods or services ranging from computer equipment to assignment help online, you need to make sure to do everything by the book.
- Check Bank and Credit Card Records
If you are worried that your partner is hiding cryptocurrency assets in the divorce, there are ways that can help you look into this. For example, there are plenty of websites and platforms out there which are built to help people trade or buy digital currencies, such as Coinbase, Etoro, or Binance, just to name a few. As soon as your partner makes a single transaction from those platforms into the world of actual dollars, or places like online stores or college papers websites, it can be evidence enough to warrant a further investigation, especially if your spouse has failed to mention they have cryptocurrency assets.
Seeing as each crypto wallet has its own unique key, its activities can be easily identified and traced, especially in cases like this.
- Look into Purchase History
It doesn’t take a lot in terms of ID to set up a digital wallet. In most cases, all one needs is an email. So, there is no way of knowing if your spouse actually has a crypto wallet, which means you have to wait for them to make an actual transaction or a purchase. One of the ways they may be getting around this is by having someone else make purchases of Amazon goods or paying for essay writing service for them, and then paying that person using digital currency. So, while you can’t look into transactions between two Bitcoin users or users of other coins, you can keep an eye on your spouse’s purchases on Amazon, eBay, or any similar place.
- Ask for Copies of Bank and Credit Statements
Another activity that may raise suspicion that your spouse is hiding cryptocurrency from you is the lack of bank and credit statements. If you have received these statements in the mail in the past, but they have stopped coming in recently, you should call your bank and ask them to send you copies. Other suspicious activities may include new passwords to joint bank and credit accounts. If you find yourself locked out of these accounts, you should notify your lawyer immediately and they will take all the necessary steps to protect your interests in the divorce. It might not be as easy as looking up top resume reviews online, but you can find the information you need with a few phone calls.
- Inform Yourself about Cryptocurrency Transfer
If you know everything about cryptocurrency assets that need to be divided between you and your spouse, it might seem like a done deal. However, there might be a couple of hurdles that you might need to jump over. For instance, you need to know how to access and actually use the currency in order to make use of those funds. Also, you should research if there are any potential tax liabilities you need to be aware of that come with the cryptocurrency funds you have received. There are other situations, as well. For example, if a buyout is to take place and cryptocurrency is to be used for that purpose, both parties need to agree on the number of coins, as well as the time and date of conversion.
- Decide on the Split
There are at least three different ways in which you and your spouse can decide to split up your cryptocurrency assets. First, there is the split that occurs in coins only. This is favorable because there are no fees that need to be paid when funds are transferred from one account to the other. However, because of the volatile nature of the currency itself, you might end up getting less than you expected. So, in order to avoid fluctuation, some people prefer to be cashed out. Sure, it does come with a 2-3% fee, but at least you know the amount you are ending up with. Finally, you can also keep your coins and compensate your spouse in other ways, such as letting them keep more of some other asset.
- Find Out How Cryptocurrency Will Affect Your Taxes
Even though cryptocurrency allows you to transfer funds easily and anonymously, that still doesn’t mean you are completely exempt from paying taxes on your coins. How so? Well, since 2014, the IRS started treating virtual currency as property for tax purposes, which means it is subject to capital gains taxes. In fact, the IRS has been sending out letters to cryptocurrency owners which have made at least one transaction letting them know that they are obliged to pay their taxes. This means that your tax return might be affected if you have received crypto funds in the divorce settlement, and it may even affect your past tax years.
- Get a Good Lawyer
Knowing all the stuff laid out above is great, but in order to access more information and make sure that you are legally protected and fully informed about your legal obligations, as well as those of your spouse, getting a good lawyer that is able to help you navigate these murky legal waters is an absolute must. Ultimately, you will need to get one because your spouse will probably do the same.
As you can see, dealing with cryptocurrency in the divorce can get pretty complex. Not only do you need to worry about making sure that you are compensated fairly, but you should also be aware of your legal obligations, because there might be some. We hope that this article will help you do that. Good luck!