As cryptocurrency becomes a more popular investment for people in California and across the country, it is also becoming a growing issue in a divorce. Bitcoin was launched in 2009, but the values of cryptocurrencies have soared in recent years as have the different types of coins available on the market. In many cases, cryptocurrency holdings can become a significant factor in high-asset divorces as one of many valuable items of property to be divided. Some people have also alleged that their former spouses are using cryptocurrency technologies to hide assets from family court.
When cryptocurrencies are involved, some divorces may become longer with increased attention necessary to asset investigation and verification. Of course, it is also possible to conclude an amicable divorce that includes a cryptocurrency distribution. However, when spouses are locked in a battle over asset division, cryptocurrencies can play a role. This is especially true for undisclosed or hidden transactions. While some online exchange purchases are easily taxable, other direct purchases can be more difficult to track, especially if the crypto assets are not disclosed to the IRS by the holder.
People can try to hide assets from the IRS and from the family court, but the penalties for this can be significant: The other spouse may receive a larger share after the malfeasance was discovered, and tax penalties can be high. Other issues can emerge even when everyone is fully transparent about their holdings because it can be difficult for both parties to agree on a fair valuation of cryptocurrency assets.
High-asset divorces can be complex when there are significant sums at stake for both spouses. A divorcing spouse may work with a family law attorney to help protect key assets and work to achieve a fair settlement on major issues, including property division and spousal support.