Cryptocurrency became popular in the late 2010s following the drastic increase in Bitcoin’s price, which is now one of the most popular forms of crypto in the world. With the new mainstream attention, many people made the decision to invest in this currency. Unfortunately, however, in the event that you or your spouse owns crypto and has decided to file for divorce, it’s critical to understand how these assets will be handled during this process. The following blog explores what you should know about these legal matters, including the importance of working with Somerset County property distribution attorneys to explore your legal options during these complex matters.
Is Cryptocurrency Considered Marital Property in New Jersey?
When you and your spouse decide to file for divorce in New Jersey, it’s imperative to understand what property will be subject to distribution. Generally, any asset that is considered marital property, which means any property obtained by either spouse after they were married or that is co-mingled with marital property, will be divided. New Jersey adheres to the equitable distribution method, meaning the assets will not automatically be distributed evenly between the spouses but rather fairly, based on each spouse’s contribution to the marriage.
As such, if you or your spouse owns crypto, whether or not it is considered marital property will depend on a number of factors. First and foremost, the court will examine when the crypto was obtained. If you or your spouse made the investment after you were married, it would constitute marital property. If it was obtained prior to the marriage, it may be considered separate, and therefore, would not be subject to distribution. However, if you obtained the cryptocurrency prior to the marriage and then you and your spouse jointly made an investment decision that increased the value of the asset, your spouse would likely receive a portion of the increased value of the asset. This is because this is considered a marital effort.
How Do the Courts Determine the Value of Crypto?
Because cryptocurrency is volatile, meaning its value is constantly fluctuating, calculating the value can be incredibly difficult. As such, the courts typically use fair market value either on the date that the divorce petition was filed or the asset’s value on the date of distribution.
However, because the value changes rapidly, for those with a considerable amount of cryptocurrency that falls under marital property, expert witnesses like forensic accountants or digital asset valuation experts may be necessary to help provide insight as to the fairest way to divide the assets in accordance with how the court wishes to split the marital property.
As you can see, navigating the division of an asset like cryptocurrency during a divorce can be incredibly complex. That is why it’s in your best interest to connect with an experienced attorney to discuss your legal options during these difficult times. At the Siragusa Law Firm, our team will do everything possible to help you fight for the best possible outcome during your divorce. When you need assistance, contact us today to learn how we can help you.