Property distribution is one of the most complicated and contested issues in a divorce, so when new technologies like cryptocurrency are introduced, it can make things even more complex. If you are getting a divorce in Michigan, it is important that you understand how all assets will be divided, including cryptocurrency. For more information and representation, reach out to a knowledgeable Oakland County property distribution lawyer today.
What is Cryptocurrency?
Cryptocurrency is a digital currency that uses cryptography to allow transactions to be made between users. The system is decentralized, meaning that it is not controlled by one central authority, like a bank. Instead, it uses a blockchain to record transactions.
Cryptocurrency acts as any other type of money and allows people to buy and sell products and services over the internet. Bitcoin is one of the most recognizable names in cryptocurrency, but other common companies include Litecoin and Gemini.
Is Michigan an Equitable Distribution State?
Yes, Michigan is what is referred to as an equitable distribution state. This means that when it comes time to divide property between spouses in a divorce, assets are split based on what is fair and equitable to both parties, not necessarily what is equal.
Depending on the income, education, earning capacity, and health of both spouses, one may be better off financially than the other. Equitable distribution ensures that all marital assets (property that is owned by both parties) are divided in a way that evens the financial playing field.
How is Cryptocurrency Divided in an MI Divorce?
Because cryptocurrency is a digital asset and has no physical shape or value, it may seem confusing or overwhelming. However, it is treated like any other piece of property. Cryptocurrency that was accumulated during the marriage or contributed to or earned by both spouses is considered a marital asset and is subject to equitable distribution.
To divide cryptocurrency, it must first be identified. This type of currency is generally stored in online wallets or other digital forms, which can make it difficult to trace. Spouses may attempt to hide or conceal assets in the digital space. It may take the work of a court order, a forensic accountant, or a digital expert to track down these assets.
Once they are accounted for, however, they can be valued. Cryptocurrency markets are notoriously volatile. The value of assets can fluctuate significantly in short amounts of time. The court must decide when to value the currency, after which it can assign a set amount of the currency to each spouse based on equitable distribution.
To actually split up the assets, the court could order that one spouse transfer a portion of the cryptocurrency to the other or have the digital assets sold and profits split. Additionally, if one spouse holds a significant amount of cryptocurrency and the other does not use or want it, the court could award other assets of a similar value, like cash or investments.
To learn more and secure legal counsel, reach out to an experienced family law attorney today.