How Are Virtual Assets Divided in an Arizona Divorce?
We live in a highly technological world. Communications are changing, jobs are changing and so are assets.
Virtual assets have become a real thing that has the power to affect financial and economic processes. These are representations of currency that carries a specific value. The bitcoin is one example of a virtual asset that’s already affecting transactions in the real world.
Many people are saving bitcoins or investing in cryptocurrency due to the huge potential of such virtual assets. What happens in the event of two spouses, however, investing in cryptocurrency together and deciding to get a divorce?
This is relatively rare scenario but chances are that Arizona courts will have to deal with virtual asset divisions more often in the future. As a result, it’s important to pinpoint the specifics and the regulations that govern such interactions between former spouses.
Dividing Cryptocurrency and Other Virtual Assets
The problem with virtual assets is that they are intangible in nature. Until they get exchanged into actual currency or physical assets, virtual assets are out there in the digital space and they don’t really add a lot to the community property accumulated over the course of the marriage.
Think about it this way – most people don’t really know what cryptocurrency is. As a result of the relatively innovative nature of virtual assets, many will be completely clueless about addressing such during a divorce.
It’s also possible for only one of the spouses to be aware of the existence of the virtual asset. In this sense, cryptocurrency like the bitcoin provides the perfect opportunity for concealing assets in a divorce to refrain from splitting with a former spouse.
In the US, cryptocurrency is usually considered intangible property. Intangible property (assets) consists of things like copyrights, patents and royalties. Depending on the specifics of the situation, intangible property can be separate or community property (if both of the spouses worked towards its establishment/acquisition over the course of the marriage). If this is the case, the intangible property will be evaluated at the time of the divorce to determine what each of the spouses is entitled to.
Alternatively, the two spouses can come to a mutually-beneficial arrangement that’s listed in the divorce papers. This is a good choice for intangible property that’s anticipated to continue gaining value or producing royalties in the years to come. The same is true for virtual assets like bitcoins. Exchanging bitcoins for dollars to divide the intangible assets at the time being may not be the smartest move. There are theories that the value of the bitcoin will go up in the future. Thus, selling right now may not be the smartest thing to do.
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Non-Disclosed Virtual Assets: Be Careful!
As already mentioned, there have been instances of people using virtual assets like cryptocurrency to “hide” some community property in the divorce proceedings.
Sometimes, it can be difficult to prove what the origin of a virtual asset is, who acquired it and when exactly it was acquired. Thus, even if the two spouses bought bitcoins together, one could find it impossible to produce the necessary evidence and establish community property.
These types of legal battles can get really complicated. This is why it’s essential for both spouses to maintain access and records about transactions/acquisitions involving virtual assets.
There haven’t been that many cases of one party knowingly concealing virtual assets in divorce proceedings.
Through the utilization of the right tools, however, such digital assets can be tracked down, evaluated and split between two people getting a divorce.
The consequences of attempting to conceal any kind of asset will be severe. Hence, it’s not a smart idea to attempt keeping virtual assets just for you. Discuss the situation with your ex and talk to your attorney. Coming to a mutually-beneficial agreement is the smartest and the best thing for everyone involved.
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