Dividing Cryptocurrency During a Florida Divorce

As the years go by, digital assets continue to grow in popularity. Among the most popular types of digital currency is cryptocurrency. The growing popularity of cryptocurrencies means that these digital currencies are finding their way into divorce proceedings. As more couples invest in cryptocurrency, it is becoming more common for these digital assets to be included in property division lists. But dividing cryptocurrency in a divorce can be complex. It can present several unique challenges. This article clarifies the complexities of dividing cryptocurrency during a Florida divorce and offers insight into navigating a divorce involving cryptocurrency or other digital assets. Read on!

Is Cryptocurrency Considered Marital or Separate Property?

Before any property can be divided during a Florida divorce, the court must determine which property is marital and which is separate. In Florida, only marital property is subject to division. Cryptocurrency is treated like any other property. If crypto was acquired during the marriage, it is considered marital property, and thus subject to division. On the other hand, if you or your spouse purchased or received cryptocurrency before the marriage, or inherited it during the marriage, it may be classified as separate property. We have used the term “may” because there is a catch. Suppose you acquired crypto before marriage but mixed it with marital funds, for example, by using a joint account to purchase additional crypto. In such a case, the crypto may be considered marital property.

How Are Digital Assets Divided in Florida?

Digital assets are treated like any other property during a Florida divorce. Since Florida is an equitable distribution state, cryptocurrency is divided fairly, which does not necessarily mean a 50/50 split. To determine how to divide cryptocurrency fairly, the court will consider several factors, including each spouse’s financial situation and the length of the marriage.

Strategies for Dividing Cryptocurrency

When it comes to dividing marital cryptocurrency in a Florida divorce, spouses can take several approaches, including the following;

• Direct Transfer: Transferring half of the crypto to the other’s digital wallet.
• Liquidation: Selling the cryptocurrency and dividing the proceeds equally.
• Asset Offsets: For example, your spouse can keep the crypto while you get a larger portion of another asset, such as real estate.

Every method has advantages and disadvantages, depending on the type of cryptocurrency involved and your financial goals. So, take time before deciding which approach to take.

Challenges and Complexities Posed by Cryptocurrency

Crypto presents unique challenges when it comes to tracking, valuing, and division. Unlike traditional financial assets, cryptocurrencies can be stored anonymously, making them harder to trace. It is easy for a spouse to hide or fail to disclose these assets. Additionally, the value of crypto fluctuates rapidly, complicating fair division. The timing of valuation is key, as the value of cryptocurrency can rise and fall significantly in a short time. It is often a wise idea to bring in experts to help determine these digital assets’ value.

Additionally, the IRS treats crypto as property and not currency, which adds a layer of complexity to divorce cases involving these digital assets. Cryptocurrency is subject to capital gains tax when sold or exchanged. It is important to consult with a tax professional to ensure compliance.

Contact Us for Legal Help

If you’re facing a divorce involving digital assets, contact our skilled Orlando divorce lawyers at the Arwani Law Firm at 407-254-0060 or online for legal help.

Source:

law.cornell.edu/wex/equitable_distribution