When going through a divorce, it is important to consider how to divide the assets of the marriage. This includes any cryptocurrency investments made during the marriage.
Cryptocurrency is a complex asset and divorcing couples need to understand the process of valuing and dividing cryptocurrency in order to ensure an equitable settlement.
The first step in understanding how to divide cryptocurrencies in a divorce is to determine if it is marital or separate property.
Generally, any cryptocurrency acquired during the marriage is considered marital property and subject to division in a divorce. However, if one spouse held cryptocurrency prior to marriage, this may be considered separate property that need not be divided between spouses.
Crypto Currencies in a Divorce Setting
When it comes to valuing cryptocurrencies in a divorce setting, the actual value can be difficult to determine. This is because crypto currencies are highly volatile and have no central authority making it difficult to ascertain their worth. A court may look at when the currency was acquired, its volatility over time, and any other factors that may indicate its value in determining what each spouse is entitled to.
Another way of valuing cryptocurrencies in a divorce is by hiring a forensic accountant. A forensic accountant or valuation expert can help determine the current value of cryptocurrency at the time of divorce and use other methods to ensure that both sides receive a fair share in the division of assets. Their meticulous analysis and comprehensive approach contribute to a thorough and equitable resolution in the context of divorce proceedings.
Dividing cryptocurrency can be a challenge. At the completion of a divorce, legal documents are presented to financial companies so that assets can be divided. Many cryptocurrency companies don’t acknowledge legal divorce documents. Therefore, it is often advised that the spouse who owned the crypto during the marriage keeps the crypto after the marriage. Other assets can be transferred to the non-crypto-owning spouse in order to make the division of assets equitable.
Divorcing couples should also be aware of potential tax implications when dealing with cryptocurrencies. Depending on how long each spouse has owned the cryptocurrency, there may be significant tax implications when dividing them in a divorce. Consulting with a CPA or financial advisor can help couples navigate through this complex process and minimize any potential tax liabilities for both parties.
It is important to remember that the division of assets, including cryptocurrencies, should be resolved before entering into a final divorce settlement agreement. If cryptocurrency does not have to be divided, couples should take steps to ensure that it is kept secure until both parties are ready to move forward with the divorce process.
Guide of a Financial Advisor in Crypto Currencies
Finally, talking to a financial advisor can provide invaluable guidance in understanding how to value and divide cryptocurrency in a divorce. A financial advisor can help provide specific advice on the best way to manage and divide cryptocurrency to ensure that both parties receive a fair settlement. They can also help create a plan to protect the assets of each spouse so they are able to move forward on their own after the divorce is finalized.
Divorcing couples should take the time to understand how to value and divide cryptocurrency in order to have an equitable division of marital assets. With the right guidance, couples can ensure that both parties are protected and receive a fair settlement in their divorce.
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Prior to making an investment decision, please consult with your financial advisor about your individual situation. The prominent underlying risk of using bitcoin as a medium of exchange is that it is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involve a high degree of risk. Investors must have the financial ability, sophistication/experience, and willingness to bear the risks of an investment, and a potential total loss of their investment. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Purposeful Wealth Advisors and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Individual investor’s results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. You should discuss any tax or legal matters with the appropriate professional.
