The New Jersey Law Journal recently tackled the issue of the impact of Bitcoin and cryptocurrency on divorce.
While you have likely heard (and are no-doubt tired of hearing) about the cryptocurrency craze, the article highlights the challenge of accounting for all assets of a divorcing household in today’s digital world.
“Volatile in value and potentially difficult to trace, Bitcoin and other cryptocurrencies present a new wave of challenges in divorce asset division as attorneys grapple with key questions” the New Jersey Law Journal wrote. “How do you properly value an asset that can gyrate 20 percent or more in value in a single day? How can you be certain that your client’s obfuscating spouse isn’t secretly squirreling away millions in unregulated crypto coins?”
Experienced divorce lawyers in East Brunswick know identifying all of a couple’s assets can be critical to obtaining an equitable division. This can be made more difficult when one spouse has handled the majority of a family’s finances. Dealing with cryptocurrency – which by definition aims to be an untraceable means of wealth – makes the process even more difficult.
During the discovery phase of a divorce, each spouse is asked to disclose all bank accounts. However, according to the Wall Street Journal, cryptocurrency is not technically considered money, creating a gray area with which your New Jersey divorce attorney must deal, and a potential avenue for a spouse to hide assets. Discovery typically begins with the New Jersey Family Part Case Information Statement (CIS), which requires both spouses to report comprehensive financial information, including a listing of all assets in Part E.
According to IRS Notice 2014-2, virtual currency is to be treated as property for federal tax purposes. Depending on the taxpayer’s circumstances, cryptocurrency holdings can be classified as business property, investment property, or personal property.
Still, uncovering hidden assets involving cryptocurrency is more challenging. In some cases, deposits or withdraws to a crypto account may appear on bank or credit card statements. A spouse’s app store history may also show a spouse downloaded a cryptocurrency wallet or trading app.
Under New Jersey divorce laws of equitable division of assets, a judge may award a spouse additional assets if it’s determined the other spouse has concealed assets or otherwise been financially dishonest. A final divorce judgment may even be set aside under the laws of perjury via Rule 4:50 if hidden assets are later discovered, no matter the length of time that has passed. Reopening equitable distribution judgments to address such fraud are not limited by time, according to New Jersey Court Rule 4:50-3; Von Pein v. Von Pein.
If you believe your spouse is hiding assets….
Call Rozin|Golinder Law, LLC today for a free and confidential consultation.
Additional Resources
Section 2A:34-23.1 New Jersey Revised Statutes, Equitable division criteria
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