In a Michigan divorce, property is to be divided equitably between the spouses. This refers to all marital property, or assets acquired during the marriage. This includes complex property such as stocks, bonds, real estate, and businesses.
Cryptocurrency is a type of complex property division. Cryptocurrency has become common in recent years and involves digital currency maintained by a decentralized system that does not manage it or maintain its value. Common types include Bitcoin and Ethereum, although there are more than 4,000 types available.
Cryptocurrency can be managed online or offline. It can be traded for cash, goods, and other cryptocurrency. However, most people use it for investment purposes, like gold. Because of this, it is not uncommon for people to have tens or even hundreds of thousands of dollars of it.
Because cryptocurrency is easy to hide, it has become a commonly hidden asset. It is estimated that 20% of American adults have invested in it, with men between the ages of 18 and 49 most likely to invest in it.
In divorces, it is easy to overlook cryptocurrency if a financial expert is not specifically looking for it. Because of this, most lawyers will look for it, especially if a spouse suggests that there may be hidden assets.
How do experts find this asset? First, a lawyer will use Michigan’s Domestic Relations Verified Financial Information Form, which is required in all divorce cases. The “miscellaneous” section of this form states:
“Are there any other items you own that have financial value such as electronic assets, season tickets, or electronic currency such as bitcoin? … If yes, describe asset, where it is held and its current value as of a specific date[.]”
Lawyers will also review their client’s bank statements and look for transactions, such as transfers to online trading platforms and any transfers through PayPal, Venmo, and other cash apps. Cryptocurrency should be reported on tax returns, but not many people do so. Still, tax returns are a good place to look.
Also consider online platforms such as Robinhood and Coinbase. These companies will typically respond to subpoenas, which can be helpful in a divorce. A forensic evaluation of computers or external hard drives can also help locate cryptocurrency.
In complex litigation matters, though, it may be wise to consult with a forensic accountant. Such an expert can help locate cryptocurrency if hidden assets are a concern. A forensic accountant can also help with valuation, which can be complex, as cryptocurrency can rise or drop as much as 1,000% in just one day.
Contact Us Today
Cryptocurrency, like other marital assets, is subject to split in a Michigan divorce. However, many people hide these assets, and they can be hard to value due to their volatility.
The Law Offices of Michael A. Robbins can help you deal with even the most complex property division matters. We understand the unique challenges of divorce and will work to find solutions. Schedule a consultation by calling 248-646-7980 or filling out the online form.