Cryptocurrency functions as a digital money that operates on a decentralized network (i.e., the blockchain) rather than a central bank system, and can be used for payments, investments, or powering applications. You may be wildly unfamiliar with this newly conceptualized asset, and you may not even know your spouse owns it until your divorce proceedings commence. Overall, this can make your case all the more complex, as this digital asset fluctuates rapidly, needs specialized financial tools to track, and can easily be transferred or hidden. With all that being said, please continue reading to learn just how a New Jersey family court will handle your and/or your spouse’s cryptocurrency in your litigated divorce proceedings and how an experienced Bergen County equitable distribution attorney at McNerney & McAuliffe can help protect the assets that are rightfully yours.
How do courts determine whether cryptocurrency is marital or separate property in a divorce?
First things first, you must grasp the state of New Jersey’s equitable distribution system. Using this method, a New Jersey family court will split up your marital property in a way that is deemed fair and just, while separate property goes to its respective owners. That said, marital property is typically considered property that is brought into the marriage or acquired during the marriage. This is while separate property is usually purchased before the marriage or kept outside of the marriage.
And so, the timing of cryptocurrency ownership critically matters. If your spouse purchased this digital asset before you exchanged vows, or if they received it as a gift or inheritance from their loved one, then it will likely remain as theirs post-divorce. However, it may be divided as marital property if they bought it using shared funds from your joint bank account, regardless of your knowledge of it at the time. Or, if it was obtained separately but ultimately commingled with one of your marital accounts.
How do courts locate hidden or undisclosed cryptocurrency during a divorce case?
Given the extenuating circumstances mentioned above, which can heavily influence the court’s final judgment, it is important to collect transaction records of the cryptocurrency potentially involved in your marriage. With this, we may advise you to bring on a forensic accountant to your legal team, and we may work to scout out and hire them on your behalf. But also, a forensic accountant is necessary to locate any cryptocurrency your spouse may be hiding or failing to disclose in your divorce case.
Of note, even though cryptocurrency is decentralized, blockchain ledgers are a public record. Still, you may need an expert to trace your spouse’s activity and identify any suspicious transfers, concealed or hidden holdings, etc. They may even fight on your behalf during the discovery phase of your case to get your spouse’s wallet addresses, purchase confirmations, transfer records, and other financial documentation surrounding their cryptocurrency.
This may be pivotal for you, as the New Jersey family court may punish your spouse for this offensive behavior by awarding you a greater marital share of the cryptocurrency. What’s more, this may indicate that your spouse is hiding even more assets from you, which your forensic accountant can pivot to uncovering next. Even though you may not understand how this digital asset works, a financial advisor may guide you on how to use it to support yourself and your family financially post-divorce.
In conclusion, we suggest you employ the services of a skilled Bergen County family law attorney from McNerney & McAuliffe if you want the best possible chances at a positive legal outcome. We look forward to serving you.