The Bitcoin Divorce: How Do Courts Divide Cryptocurrency?

How is Bitcoin Treated During a Divorce - Stockton Family Law Attorneys

Bitcoin and other cryptocurrencies are treated like property in a divorce – but how does division of these assets work in California? So far, it’s been a little bit tricky, so here’s what you need to know if your divorce involves Bitcoin or another cryptocurrency.

The Bitcoin Divorce: How Do Courts Divide Cryptocurrency?

When you’re talking to your Stockton divorce attorney about property division, make sure she knows that you have assets in Bitcoin. More separations involve cryptocurrencies than ever before, and in some cases, the values held in those currencies is exceptionally high. Like in any divorce, it’s imperative that both parties fully disclose the extent of their assets; if one doesn’t, the search for the funds can be time-consuming and expensive.

There are tools available to trace Bitcoin, according to Forbes, but many attorneys aren’t familiar with how to use them (or even familiar with the currency itself). However, courts are used to handling cases that require tracing assets – including those that are held offshore, which is a little similar to the types of Bitcoin holdings that are appearing in divorce court today.

Valuing Bitcoin During Divorce

Bitcoin’s value can fluctuate dramatically, which means it’s tough to pin down a dollar figure during divorce. What it’s worth when you file the papers isn’t necessarily the same as what it’s worth when the judge signs your divorce decree, so it’s not as straightforward as traditional investments are. You can’t count on the currency’s worth until the day your judge signs the final papers.

In some cases, it’s best for the partners to skip valuation and divide the Bitcoin itself. That way, it’s a fair split – and it causes fewer logistical problems throughout the divorce.

How is Bitcoin Divided in a Divorce?

Whether you and your ex-spouse choose to divide your Bitcoin assets or you value them and use them in the settlement, the courts treat the currency like it treats other types of property and assets. Each party will list their assets and the values of each on a Schedule of Assets and Debts (Form FL-142), and then exchange copies with the other party. If each party is satisfied that community assets and debts are fully disclosed, the property division phase of divorce can begin.

Community Property vs. Separate Property

If one or both parties to the divorce obtained Bitcoin or another cryptocurrency during the marriage, it’s likely to be considered community property. Under California law, spouses are supposed to divide community property equally.

If one or both parties came into the marriage with his or her own cryptocurrency, it’s likely to be considered separate property. It’s also likely to be considered separate property if one party inherited it or received it as a gift. Usually, separate property belongs to the same spouse throughout the marriage and during the divorce; it’s not typically subject to equal division like community property is.

Do You Need to Talk to a Stockton Divorce Lawyer About Bitcoin in Your Divorce?

We can help you if you’re dealing with a divorce that involves Bitcoin or another cryptocurrency. It’s our mission to help you reach a fair and just settlement, so please call us at 209-910-9865 or contact us online to schedule an appointment with an attorney.