In today’s digital age, cryptocurrency has become a valuable asset given its decentralized nature. However, during divorce proceedings, it can present a significant challenge, as these funds are not stored in traditional bank accounts. This makes them difficult to track, locate, and account for. Therefore, a deceitful spouse could use cryptocurrencies to conceal assets, making the discovery and division process much more intricate. If you are going through a divorce and you have cryptocurrency holdings, you’ll want to continue reading as we explore how our knowledgeable Suffolk County Divorce Attorney can help you protect your financial interests.
What is Cryptocurrency?
Cryptocurrency is a digital payment system that uses cryptography to enable transactions without a central authority. Instead of physical money that can be carried around and exchanged in the real world, these funds exist purely in the digital realm through online databases. These funds have no intrinsic value, meaning they are based on demand and supply, making them inherently unpredictable. Essentially, its worth can dramatically fluctuate within short timeframes.
One of the main challenges in dividing cryptocurrency during a New York divorce is determining its value. To fairly divide this asset, both parties will need to agree on a date of valuation. Typically, the date of valuation is the day both parties separate. Given the market’s volatility, the value could significantly differ by the time the divorce is finalized. Therefore, you should consult an experienced attorney who understands the nuances of cryptocurrencies.
How is Cryptocurrency Divided in a NY Divorce?
New York adheres to the equitable distribution principle when dividing marital assets. This means that assets, including cryptocurrency, are divided fairly between spouses, but not necessarily equitably. A judge will consider various factors like the length of the marriage, the contributions of each spouse in the marriage, the parties’ economic circumstances, and more.
Depending on when the cryptocurrency was acquired it can be viewed as either marital or separate property. If it was acquired during the marriage using marital funds, it will be considered a marital asset thus subject to equitable distribution. However, if one party purchased the cryptocurrency before marriage or used separate funds, it may remain separate. This means it would be excluded from property distribution during your divorce.
You should note the potential tax implications of dividing cryptocurrency. Transferring this digital currency between parties may be considered a taxable event, meaning capital gains tax could apply when one party decides to liquidate their share. As such, it’s in your best interest to consult with an attorney who can provide a clear understanding of the potential consequences.
Given the high stakes, seeking guidance from a seasoned attorney from the Law Offices of Susan A. Kassel, P.C. is crucial to ensure a favorable outcome. Connect with our firm today to discuss your case.
