Divorce is a stressful process that can be made even more complex with the introduction of digital assets like cryptocurrency. In New Jersey, courts strive to ensure transparency and fairness when it comes to the distribution of marital assets. Because cryptocurrency can be moved quickly, stored without a traditional bank, and valued differently depending on timing, it can cause confusion and complications. Understanding how cryptocurrency disputes are handled in a divorce case is imperative for anyone with digital assets. Continue reading and consult with a knowledgeable New Jersey complex property division lawyer today.
What is Cryptocurrency?
Cryptocurrency, often shortened to crypto, is a type of digital asset that functions largely the same as other forms of money. However, it only exists electronically and uses cryptography for security. Cryptocurrencies run on a blockchain, a shared digital record of transactions. These assets are decentralized, meaning they are not governed by a single financial institution like traditional banks.
Why Does Crypto Create Issues in Divorce Cases?
Cryptocurrency does not inherently create disputes during divorce, but it has the potential to be more complicated than traditional assets. Crypto is easy to move and difficult for the non-holding spouse to access. If one spouse controls the account, wallet, and logins, the other may have no way to confirm how much of the asset exists or whether a portion of it was transferred in an attempt to hide assets.
Another issue is that the value of crypto is ever-changing and extremely volatile. A crypto account could be worth one amount one day and a very different amount only a week or two later. This can lead to disagreements about what date to value the asset for distribution purposes.
Is Crypto Considered Marital Property in NJ?
New Jersey is an equitable distribution state, meaning marital assets are divided fairly, though not necessarily equally. Cryptocurrency is considered marital property if it was acquired by either spouse during the marriage, regardless of whose name the account or wallet is in. Like other assets, any crypto acquired before the marriage is typically classified as separate property, given that it was not mixed with marital property, traded during the marriage, or its value was not increased through marital funds.
How Are Cryptocurrency Disputes Handled in NJ Divorce Cases?
New Jersey courts handle cryptocurrency disputes in the same way that any other issue would be handled. Courts prioritize full financial disclosure, credible evidence, and equitable distribution. Both spouses are expected to provide documentation for the court to understand what cryptocurrencies exist, who controls them, and what they are worth.
If a spouse seems to be hiding crypto, courts can use the discovery process to investigate, requiring additional documentation to ensure full disclosure. The court may impose financial penalties and other actions to discourage dishonesty or concealment.
For more information, reach out to a skilled attorney today.
