Divorce and Cryptocurrency

When you are separating in an age where almost everything is carried out electronically and online, it is important that your divorce solicitors understand the digital assets that your husband, wife or civil partner may hold and how to trace them.

In this article, financial settlement solicitor Robin Charrot answers your questions on divorce and digital assets.

Contact Evolve Family Law for Expert Divorce Advice.

Digital assets in divorce financial settlements

There is no definition of a digital asset in financial remedy applications and financial settlement negotiations. That is probably sensible, because the world of digital assets changes rapidly with the latest developments in tech.

Divorce solicitors find it best to outline the type of digital assets that you or your spouse might own to trigger a discussion about what assets you or your husband or wife might hold digitally. It is essential to do that, as whilst you may not forget about the existence of a holiday home, a collection of watches, or your partner’s shares in the family business, you may easily forget about an online bank account or the cryptocurrency that your spouse mentioned years ago.

Digital assets can include:

• Cryptocurrency
• Bitcoin
• Non-fungible tokens (NFT)
• Ethereum
• Online share dealing account
• PayPal account
• Air miles
• Online gaming and betting accounts
• Income-generating social media accounts
• Sentimental assets such as photo libraries

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Cryptocurrency and its relevance to a divorce financial settlement

Digital assets such as cryptocurrency can be family assets in the same way as property, pensions, or shares in a family business. Just because something is held digitally, rather than physically, it does not mean that it is irrelevant to your financial settlement.

Reaching a fair divorce financial settlement involves:

1. Working out what assets a husband and wife own individually, jointly, or with a third party and assessing if the assets are family or matrimonial assets or non-matrimonial assets.
2. Tracing assets where there are valid suspicions that an estranged husband or wife has not fully disclosed assets.
3. Getting the assets accurately valued.
4. Looking at the needs of a husband, wife and any dependent children to work out the relevance of any non-matrimonial assets. If the asset is not considered to be a family asset, the court can have recourse to it if it is necessary to do so to meet a husband or wife’s reasonable needs.
5. Negotiating a financial settlement, and if that is not possible, representation in a financial remedy application to obtain a financial court order.

Dealing with cryptocurrency in financial remedy proceedings

A good divorce solicitor combines bloodhound tracing skills with technical knowledge and a hefty dose of pragmatism. For example, an eBay account may not seem significant, but it is if it is the primary source of sales in a family business, or if a spouse has been squirrelling money away by keeping it in a PayPal account. Likewise, everyone talks about cryptocurrency, but your financial settlement lawyer needs to track down the information to find the investment or to show the discrepancies between disclosed assets and lifestyle.

Whilst some digital assets, like photos or the dog’s Instagram account, may only have sentimental value, they still are important to you, so need to be sorted out fairly but without racking up massive legal bills.

A financial settlement solicitor will determine whether a forensic digital expert is needed to track down digital assets, and when pragmatism and common sense suggest the expense is not proportionate.

When dealing with digital assets in financial negotiations after a separation, it is essential to consider:

1. Drawing up a digital inventory – what you know that you or your spouse holds as digital assets.
2. What you suspect and why you suspect it – was the talk of bitcoin hot air, or is there a basis to trace assets or gather evidence of their existence?
3. Are the digital assets capable of being shared, and if not, who will keep them?
4. The fairness of one spouse keeping the digital assets and the other keeping non-digital assets. That consideration may be relevant if there is a large online share dealing account subject to stock market fluctuations, but there may be an equally uncertain property market if the other spouse wants to keep the family home.

Financial remedy solicitors at Evolve Family Law

At Evolve Family Law, our team of expert financial settlement lawyers have vast experience in:

1. Tenacious asset tracing of digital assets and property held in the UK or overseas.
2. Divorce settlements involving high net worth individuals, assets held in trust and assets not held within the jurisdiction of the court.
3. Providing specialist legal advice in between family mediation sessions and converting a mediated agreement into a financial consent order.
4. Representing husbands and wives in complex financial remedy applications involving extensive financial disclosure requests and asset tracing, as well as disputes over asset valuations and the classification of assets as matrimonial or non-matrimonial.
5. Advising on potential financial claims after an overseas divorce.

Whether you have reached a financial agreement with your spouse and want it converted into a binding court order or need help with an ex-partner who won’t provide financial disclosure or negotiate, our lawyers can help you obtain the financial settlement and court order you need.

Contact Evolve Family Law for Expert Divorce Advice.