Though cryptocurrency has entered the mainstream of investing, it is still mysterious to many Americans. To someone only casually familiar with Bitcoin, Ethereum and other cryptocurrencies, it is not always clear what exactly you’re investing in. Also, the industry is largely unregulated compared to the stock market and other securities. For this reason, they can be convenient places to hide large amounts of cash.
More and more, cryptocurrency has become an issue in divorce cases involving wealthy spouses, especially when one spouse earned the majority or all of the household income. In such marriages, it is not uncommon for the breadwinner to handle the family’s financial affairs, like investments and taxes. By the time the divorce gets filed, the other spouse might have little idea how much their community property is worth — or even what is in the community property “pot.” Without that information, it is impossible to negotiate a reasonable property division settlement that allows both sides to continue to enjoy a lifestyle similar to their married years.
Discovery generally uncovers standard financial data like bank account statements, tax returns and investment portfolios. But when a soon-to-be divorcing person is trying to hide assets from their spouse, crypto is an increasingly common way of doing it.
Secret Bitcoin account worth $500,000
Hunting down crypto investments is not always simple, but it can be done. In an example provided by CNBC, a New York woman and her legal found surprisingly few assets apparently belonging to herself and her husband, despite his $3 million annual income. After months of efforts by her attorneys and a forensic expert, the woman learned that her husband had secretly bought more than $500,000 worth of Bitcoin and not mentioned it in the divorce-related financial disclosures.
Do you know what your community property is?
When millions of dollars worth of community property is on the line, trust between spouses can take a hit. Working with a divorce attorney who regularly represents high-asset clients and knows what it takes to get a complete and accurate picture of the property to be divided up can be invaluable.