You might have a friend or family member in Miami who has gotten in on cryptocurrency of one sort or another. Or maybe you’ve taken the plunge yourself. The popularity of the digital assets has soared over the past decade.
While Bitcoin is the most recognizable crypto name, other currencies – Ethereum, Litecoin, Dogecoin and others – are grabbing occasional headlines, as well.
Riding the rollercoaster
Bitcoin is a notoriously volatile medium of exchange. On April 16th of last year, Bitcoin was worth $7,354. A year later, it had skyrocketed to $63,214.
Of course, getting onboard Bitcoin means a rollercoaster ride of incredible highs and heart-stopping dives. As we write this on May 23, 2021, Bitcoin has sunk to $31, 772. Where will it be tomorrow or a year from now? No one knows. But many people are using authentic U.S. dollars to invest in Bitcoin and other cryptocurrencies, often with hopes of striking it rich.
Some financial analysts expect that by the end of the year, cryptocurrencies will become common parts of portfolios, nestled next to traditional assets such as stocks, bonds, savings and cash.
Property division disputes
That means that when people face divorce with a property division dispute, cryptocurrencies will increasingly be part of those discussions, negotiations and litigation.
These new investment vehicles will be carefully scrutinized by family law attorneys who are negotiating a divorce settlement and by financial experts working for clients who are going through a divorce.
In a high net-worth divorce involving the division of assets such as a Miami business, settlement negotiations can be complex and time-consuming, meaning that the divorce process can take up to two years to complete.
Analyzing crypto assets
If assets include volatile cryptocurrencies, it will be important to understand changes in the marital balance sheet and the bottom line on the day the agreement is finalized.
In a recent column on crypto and divorce, financial advisor Denise French wrote that “analyzing cryptocurrency holdings in a marital estate is going to become more and more common moving forward.” She stressed divorcing individuals, attorneys and financial experts will have to work together to examine the potential impact of accepting or giving crypto assets in divorce settlements.
Teamwork will be especially important in a split that involves a spouse who might attempt to hide assets. Encrypted digital currencies can be used to try to mask wealth, though, of course, the volatility of crypto might make them less appealing as a way to stash assets.
It will be important as well to consider the tax implications of crypto assets. Capital gains from cryptocurrency sales will have to be reported to the federal government just as they would in sales of property or stocks.
An experienced family law attorney protects your interests at every step in the Florida divorce process.