Owning cryptocurrency is a good way to expand your finances. However, your digital coins can be subject to property division during your divorce. Dividing cryptocurrency can be challenging because of its volatile nature. This factor could significantly impact your total net worth.
The valuation date rule in California
In California, the courts follow Family Code 2552 as a default rule in valuing assets, including complex assets like cryptocurrency. Generally, the court must value assets and liabilities as near as possible to the time of trial.
However, for an asset as volatile as crypto, relying on a single date can be a risk. If the market peaks on your trial date, you might need to buy out your spouse at an inflated all-time high price.
The good cause motion
Navigating volatility can be difficult, but not impossible. Your legal team can file a motion for an alternate valuation date. But since the courts do not grant this option immediately, you must demonstrate good cause. In crypto cases, proving that the asset’s value changed due to factors outside of the community’s control is essential.
The transparency trap
Dividing complex assets requires a lot of work. You might have thought of hiding your cryptocurrency to avoid the hassle, but this can be a costly mistake. If a judge finds that you intentionally hid an asset with oppression, fraud or malice, they can award 100% of that asset to your spouse.
Whether you are the one holding the digital keys or the spouse trying to ensure a fair share, the volatility of the crypto market requires a proactive approach. Seeking legal guidance can offer helpful insights into your case.