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Divorce is almost never a clean and straightforward process. For most people, it is highly complicated and emotional to dissolve a marriage and life that they have invested so much of themselves into creating. The division of assets can be particularly emotionally charged. However, with the introduction of cryptocurrencies such as Bitcoin, the division of assets during a divorce can become complicated for reasons far beyond emotional attachment. If you are considering getting a divorce in Colorado, or are currently going through one, it is important to understand how cryptocurrency may come into play to ensure that you receive a fair and equitable settlement.
Divorcing couples interested in learning more about wealth division can connect with the Denver high-net-worth divorce lawyers at Halligan LLC.
How Are Assets Divided in a Colorado Divorce?
You’ve likely heard of states where all marital property is automatically divided 50-50 between spouses. However, Colorado is not one of those states. Instead, Colorado divorce courts adhere to the principle of equitable distribution and work to come up with a way of allocating the assets that is fair based on a wide range of factors. This means that instead of a 50-50 split, marital assets may be divided 60-40, or in whatever amount the judge deems is fair. Of course, it should be noted that if spouses are able to come to an agreement on their own, with the help of attorneys, or through mediation or arbitration, a judge will only have to approve their decision, rather than make it for them. Additionally, the principle of equitable distribution may not apply if there is an enforceable prenuptial or postnuptial agreement.
What are Marital Assets?
Marital assets are generally considered to be any assets earned or acquired by either over the course of a marriage, including income generated by either spouse while married. There are exceptions to this general principle, such as assets received via gift or inheritance; however, the treatment of such assets will depend on how the asset was treated once it was received and/or whether it has increased in value. For instance, if inherited funds are deposited in a joint account or used for repairs to the shared household, the inherited funds may be considered marital assets.
What is Cryptocurrency and How Does it Come into Play During a Divorce?
Cryptocurrency is a digital asset. It can be used to make purchases without having to go through a central authority, such as a bank. Proponents of cryptocurrency emphasize its benefits, which include the fact that it is nearly immune to manipulation and cannot be counterfeited or double-spent due to the blockchain technology that supports it. This blockchain technology also allows for cheaper and quicker transfers, which can be seen as a threat to banks. While for a long time this technology was seen as largely conceptual, the actual use of Bitcoin and other forms of cryptocurrency has continued to increase since it was first introduced in 2008, and it is currently at an all-time high.
The fact of the matter is that while Bitcoin and other cryptocurrencies have been around for a while now, many attorneys are not familiar with them and have not incorporated dealing with them into their standard practices. This means that some lawyers may not think to look into whether couples hold significant assets in the form of cryptocurrency. It also means that in some situations spouses may be using cryptocurrency to hide assets from their spouse. This is why it is important to have a lawyer who is experienced in cryptocurrency and knows what questions to ask to find it.
How is Cryptocurrency Divided During a Divorce?
Once your lawyer has successfully accounted for cryptocurrency assets through discovery, subpoena, and deposition, the next step is to determine the value of the cryptocurrency and whether it constitutes marital property. Blockchain technology is helpful here because it can definitively confirm when the transfers and purchases of the cryptocurrency were made. If you or your spouse came into possession of the cryptocurrency before your marriage (or via gift or inheritance during the marriage) it may not be treated as marital property; however, to the extent it has increased in value during the marriage, that increase may be marital property.
The value of cryptocurrency can be difficult to determine, as the value can fluctuate quite significantly and frequently. Additionally, the value of cryptocurrency is not necessarily comparable to the value of a traditional investment account because of the volatile nature of this type of asset.
There are a number of ways to divide cryptocurrency. Once you have determined the value of the cryptocurrency, you and your spouse can work out an arrangement to provide cash or other assets equivalent to half of its value, or whatever percentage of it the court determines to be equitable; however, as stated above, because cryptocurrency is unlike any other asset, this may not be the best or most equitable approach. It is also possible to transfer a percentage of the cryptocurrency into a separate wallet if both parties want to continue to hold it in that form. You will have the option to negotiate the division of assets on your own with the help of lawyers or a mediator. If these efforts are not successful, you and your spouse may litigate the matter in court and the judge will determine how the assets should be divided.
Contact Halligan LLC Today to Schedule a Consultation
In this evolving digital age, it is critical to have an attorney who is informed in cryptocurrency and is competent when it comes to representing your interests completely. This includes being able to identify all assets in a divorce, including digital currencies such as Bitcoin.
If you are going through a divorce and want to make sure that you get a truly equitable settlement, the experienced Denver divorce attorneys at Halligan LLC are ready to represent you and ensure that you get the maximum settlement that you are entitled to. Our lawyers know what questions to ask and what legal moves to make to ensure that no stone is left unturned. Contact Halligan, LLC today and schedule a confidential consultation at 720-608-2361 to find out how we can help you.