Like any asset purchased during a marriage, crypto is subject to equitable division. In a lot of cases with high assets, division is complicated. Now factor in the ambiguity of crypto, as we try to explain it in this guide to crypto and divorce in Ohio.
Crypto exists in cyberspace, kept in digital wallets which are unlocked by private digital keys. They fluctuate so frequently that nailing down a value at a specific point in time is challenging. In fact, it is often difficult to know that initial investments have actually occurred. In some cases, millions of dollars have been hidden in cryptocurrency during divorces.
Let’s look at some of the legal issues surrounding crypto and divorce in Ohio.
What Is Crypto?
Cryptocurrencies are digital currencies where the government has limited control, and they do not exist in physical form.
The crypto market is highly volatile, being influenced by supply and demand and by the companies that use it. Additionally, news about the government wishing to regulate it impacts its value.
Disclosure and Discovery of Cryptocurrency
If you are divorcing your spouse and suspect that they have purchased or are hiding money in cryptocurrency, there are a few ways to investigate. If you have searched your memory bank and can recall mentions of crypto by your spouse or friends:
- It might be worth looking at credit card statements. Look for transfers of money to exchanges such as Crypto.com, Coinbase, KuCoin, Kraken, Voyager, PayPal, Venmo, Robinhood, and Metatask, to name a few.
- Check past tax returns where a digital asset event may have been reported. You may also find transaction history and the digital wallet address.
- Subpoenas may be issued to exchanges.
Discuss more strategies to discover hidden or undisclosed cryptocurrency with an attorney or a forensic accountant. If you have invested in cryptocurrency and are divorcing your spouse, it is important that you disclose this to your attorney, as it is relevant to your case.
How Is Cryptocurrency Handled in Divorce in Ohio?
Cryptocurrency is treated like a more traditional asset (not income) by the courts in Ohio during divorce. Ohio’s equitable distribution laws deem it subject to fair and equitable distribution, specifically Ohio Revised Code 3105.171.
Once division is determined, it can either be transferred to the spouse, cashed out with a lump sum given to the spouse, or the value can be offset by a larger portion of another asset, such as home equity.
The value of cryptocurrency fluctuates often. Sometimes, it’s radical. For this reason, in a case where crypto will be divided and transferred, best practice is to divide coins rather than a specific dollar amount. The separation agreement should be specific and clear about how that is to be accomplished.
Tax Implications of Cryptocurrency in Divorce
Cryptocurrency is considered property and is subject to being taxed at capital gains rates. If it increases in value, it is considered capital gain. If it decreases, it is a loss.
Crypto in Divorce Is Complex. We Can Help.
Cryptocurrency is new, volatile, and easy to conceal. It is important that all asset value is treated fairly in a divorce. Contact an Ohio divorce lawyer at Trolinger Law Offices for help.