BITCOINS AND DIVORCE: HOW TO FIND, VALUE, AND DIVIDE THEM IN AN ILLINOIS DIVORCE
Protect your financial future by understanding how Illinois courts have started dividing cryptocurrency in a divorce setting. Bitcoin first emerged in 2009, but it took several years to capture the public’s imagination. Now that cryptocurrency prices have skyrocketed, opposing parties in divorce court have taken notice.
But what is cryptocurrency? How do judges assess the value of a volatile digital asset? And how do courts determine ownership of cryptocurrency? Discover the answers to these increasingly relevant questions below.
What Is Cryptocurrency?
Any form of decentralized, encrypted, digital money that uses blockchain technology is cryptocurrency. Traders invest in cryptocurrencies much like they would for stocks. However, you can also make retail purchases with Bitcoin and other preferred crypto coins.
Popular cryptocurrencies include:
- Bitcoin (BTC)
- Ethereum (ETH)
- Cardano (ADA)
- Ripple (XRP)
- Binance Coin (BNB)
- Litecoin (LTC)
You can purchase cryptocurrencies on peer-to-peer and exchange networks like Binance, Coinbase, or Kraken. Investing in digital currencies requires a fair amount of experience and updated knowledge of market trends.
What Is the Blockchain?
The blockchain acts as a digital ledger that uses coding to record transactions. The technology distributes the ledger information across a vast network of computerized systems. Every new transaction gets recorded on the trader’s ledger, with each block comprising several transactions.
Blockchain technology works like a checkbook, where the blocks link together to create a chain of past cryptocurrency transactions. The validation techniques used to eliminate fraud include proof of work and proof of stake.
What Makes Cryptocurrency Popular?
Cryptocurrency investments are more than a mere fad. Cryptocurrency’s booming popularity makes it a topic worthy of discussion.
Cryptography and other blockchain security measures make cryptocurrency a secure payment mode. Traders can enjoy online safety and protect their money.
A big reason for cryptocurrency’s popularity involves low transaction fees. You can also settle payments within seconds or minutes.
Most cryptocurrencies serve as fungible tokens that you can quickly convert to government-issued banknotes. Their fungibility makes them a reliable exchange mode in the virtual economy.
Scope for Growth
Thousands of different cryptocurrencies already exist. However, the industry remains in its infancy, providing plenty of room for growth.
Mobile applications and crypto wallets have simplified the transactional process. You can also buy cryptocurrencies like BTC, ETH, or LTC with cash at Bitcoin ATMs.
How to Assess the Value of Cryptocurrencies
Determining the value of any asset always requires a judgment call, even when said asset commands a specific price on the open market. Although cryptocurrencies all command ascertainable prices at any given time, those prices can fluctuate drastically within a matter of hours. These significant price swings have monumental implications for the final settlement of marital property.
So, how do courts assess the value of cryptocurrencies in light of their volatility? If both parties agree to a settlement, they may include a formula to account for the volatility of their cryptocurrencies. If the judge approves the calculus, the price of cryptocurrencies within the marital estate becomes more predictable.
How to Determine Which Spouse Owns the Cryptocurrency
Dividing cryptocurrency in a divorce follows the same Illinois laws and guidelines that courts use to divide other assets. Any assets obtained before marriage, through inheritance, or as a gift remain the separate property of the recipient.
Unlike many other jurisdictions, Illinois is not a community property state, meaning that the courts will split any assets purchased, converted, or appraised during the marriage in an equitable, but not necessarily equal, manner.
In Illinois, courts consider several factors to determine an equitable distribution of marital assets. Some of the most cited factors include:
- Age, health, earning potential, and financial circumstances of the spouses
- Financial and non-financial contributions to the marital estate
- Court-ordered obligations related to previous marriages
- Prenuptial and postnuptial agreements
- Fraud or dissipation of assets
- Child custody considerations
- Alimony provisions
- Marriage duration
- Tax concerns
Courts enjoy considerable discretion when determining the distribution of marital assets. Weighing the above factors can sometimes prove unwieldy, and the commingling of assets during marriage only complicates matters. If you remain unsure about the ownership of property, you should retain legal counsel in an attempt to clear up any ambiguity.
What to Do if Your Spouse Hides Cryptocurrency
Preserve your interest in cryptocurrency hidden by your spouse without compromising your bargaining position at the settlement table. Due to cryptocurrency’s ethereal nature, some spouses try to hide their holdings by refusing to list them on their court-ordered financial statements. If you discover that your spouse has hidden cryptocurrency from the courts, there are a few things that you should and shouldn’t do to protect your property rights.
Do Inform Your Divorce Lawyer
Speak with your divorce attorney as soon as you find out about your spouse’s hidden cryptocurrency. Make sure you communicate everything you know about the hidden assets, including:
- Type of cryptocurrency
- Date of purchase
- Source of funds
- Current value
- Private key
Gather any documents or records pertinent as well. Your divorce lawyer will guide you from there. Listen carefully and take your attorney’s advice to heart. Discovering secret funds often causes an emotional response. Ensure you maintain composure, demonstrate patience with the legal process, and trust the courts to reach a fair decision.
Don’t Talk About Hidden Cryptocurrency
For tactical reasons, your family law attorney should l ask you not to speak about your spouse’s secret stash of cryptocurrency. This prohibition may include communications that take place:
- In person
- Over the phone
- Via email, text, or direct messages
- On social media platforms
- By letter
While it always remains advisable to avoid conversing about any aspect of an ongoing legal case, talking about your spouse’s possible malfeasance can complicate the case.
Consider hiring a Forensic Financial Auditor
If your spouse has hidden cryptocurrency in anticipation of divorce proceedings, you may need to hire a forensic financial auditor to find the assets and prove their existence in court. Like all expert witnesses, forensic financial auditors charge high fees. You will need to weigh the cost of hiring one against the estimated value of your spouse’s cryptocurrency holdings.
An auditor will ascertain the existence of your spouse’s hidden assets by:
- Reviewing credit card and bank account statements
- Locating physical devices and extracting evidence
- Developing an educational and behavioral profile of your spouse
- Hiring outside help after encountering any roadblocks
Don’t Harass Your Spouse About Hidden Cryptocurrency
One of the worst things you could do involves harassing your spouse about hidden digital assets. Almost everyone would feel betrayed upon learning that their spouses have hidden valuables from them. However, do not take the bait by reacting emotionally. Allow the legal process to take its course.
Stay calm, inform your legal counsel, and trust that your spouse will end up paying for the fraudulent behavior.
Peskind Law Firm | Trusted Family Law Attorneys in Chicago
Has your spouse secreted away some cryptocurrency (or other property) in response to an impending divorce? Dividing cryptocurrency in a divorce is complicated enough on its own. Proving the existence of hidden assets only makes matters worse. Call Peskind Law Firm at (630) 444-0701 to find out how we can try to help you uncover concealed crypto today.