With the rise of cryptocurrencies, many people going through divorce have posed questions about the ability of their spouse to hide money by purchasing cryptocurrency rather than holding the money in a traditional checking or savings account. The idea would be that, since cryptocurrency is a relatively new phenomenon that few people have an expansive knowledge of, it is simple to park the money there and wait for the divorce to come to an end. Once the coast is clear the spouse could sell their cryptocurrency and if we resume traditional use of the money after that.
Undoubtedly it can be a challenge to track down the digital currency. Online wallets or other places where cryptocurrency can be held can be difficult to locate for someone who has never dealt with cryptocurrency previously. The other risk that people run by purchasing cryptocurrency is that there are stories from time to time about how cryptocurrency can be hacked into or otherwise stolen by online thieves. There are no guarantors in terms of safety for these online bank accounts or wallets. As a result, if the money is stolen or otherwise misappropriated there is no FDIC that can provide you with any protection.
In today's blog post from the Law Office of Bryan Fagan, we are going to discuss cryptocurrency and its impact on your Texas divorce. The idea behind hiding assets in a divorce is nothing new. For as long as people have been getting divorced there have been attempts to hide assets to limit a spouse's ability to divide that asset between them. However, as technology advances and things like cryptocurrency become more widely utilized it can become more difficult to monitor, track and eventually divide online-based currencies.
Keeping track of cryptocurrency in a divorce
Unless you've been living under a rock you have likely heard about cryptocurrency in some form or fashion. A cryptocurrency is an online form of money that can be purchased digitally in stored in online bank accounts and wallets. There are multiple forms of cryptocurrency. Online retailers in other digital platforms have come to accept cryptocurrency in addition to normal forms of payment like credit and debit cards. Cryptocurrencies are constantly being traded and therefore their value can fluctuate significantly based on a wide variety of factors. While we have seen great increases in the value of many cryptocurrencies over the past few years, by the same token cryptocurrencies are also susceptible to dips in value.
The idea behind cryptocurrency is that it is not tied to the normal whims of monetary or fiscal policy on a national level. For example, if the economy of the US is struggling or leaders are enacting strategies that you do not agree with then you can choose to invest your money in cryptocurrency instead. This has the twin advantage of supposedly being more resilient to the tides of the economy as well as being more difficult to track down for other people. Someone coming by your house in the middle of the night can grab a safe in your closet. But it is a little more difficult to assess your bitcoin.
That is also true of your spouse in a divorce scenario. Suppose that you and your spouse had thousands of dollars in your checking account at the local credit union. Your marriage had been failing and as you inched closer to divorce you noticed that your spouse had pulled money out of your checking account with no explanation. No additional money had been deposited in the following days. Then, a divorce petition is handed to you by a process server. You are left in a situation where you do not know where all your money has gone, and you are being sued for divorce. A grim scenario. Even if the money was earned by your spouse at their job do you have a right to keep tabs on it?
In Texas, money in a checking account that was earned during your marriage is typically considered to be community property. Community property will be divided in a just and right manner by a family court judge. In the alternative, you and your spouse must determine how the property will be divided. You may choose to do so in whatever manner you believe is correct. As long as your method does not violate the public policy norms of Texas you will be in a good position to be able to set your course when it comes to dividing up that community estate.
When it comes to assets and property that may be subject to division in a divorce cryptocurrency would fall into the category of the community if it was purchased during your marriage. If you are reading this blog post, then you likely have reason to believe that your spouse has purchased cryptocurrency. A rising number of Americans own cryptocurrency and as an investment cryptocurrency has increased in value tremendously over the past few years. As a result of the increased value of these currencies, and their relatively difficult ability to track down, spouses may be tempted to hide assets in cryptocurrency during the divorce.
the problem with cryptocurrencies is that many people do not yet know about what cryptocurrencies are, where they can be purchased, and what their purpose is. if you do not understand what cryptocurrencies are then that puts you at a significant disadvantage compared to your spouse who may be working towards hiding assets and otherwise not being clear with you about where he or she is investing money. If one of those investments is into cryptocurrencies, then you need to become at least somewhat knowledgeable about how to protect yourself and your family from a spouse who may be attempting to use cryptocurrency as a means of hiding assets from the Community property division in your divorce case.
How to track down the cryptocurrency of your spouse
This is the tricky part. You can't just expect to slide the mattress to the side and expect to find envelopes full of cash. Rather, cryptocurrency is stored digitally and can therefore be trickier to track down. This is not something that you want to ignore. It may seem wiser to just move on from this subject and focus on other issues in your case. However, your spouse may store thousands of dollars in cryptocurrency that you do not know about. For reference's sake, as of the writing of this blog post, one bitcoin is worth $38,889.
Talk with your attorney about your suspicions or outright knowledge that your spouse owns cryptocurrency. I am not trying to make it seem like owning cryptocurrency is something wrong or suspect or anything like that. It is a legitimate investment and may be the future of how buying and selling are facilitated. However, the reality of its "newness" and most people's unfamiliarity with it makes cryptocurrency an easy way to hide assets from a spouse during a divorce. You should talk with your spouse one on one about issues like cryptocurrency. From my experience, most people will not purposefully withhold information or otherwise be dishonest. However, this is still a subject that you need to bear in mind as you proceed into a divorce. If nothing else, it will help train you to be diligent and leave no stone unturned when it comes to discovering potential assets and protecting yourself from a financial perspective.
A good way to determine if your spouse may be hiding something from you is if he or she has undergone any major changes in their lives over the past few years. For example, if your spouse has suddenly taken up a new hobby, works longer hours, or is generally away from the house more this could mean any number of things. I am of course speculating about all of this. I don't know your specific circumstances. However, it pays for you to investigate things like this so that you do not run into a problem in your divorce. The last thing that you want is to get divorced and find out months later that your spouse had been hiding cryptocurrency from you that was worth tens of thousands of dollars.
Accessing cryptocurrency information on the computer
Discovery is the primary method to uncover information, documents, and answers to important questions from your spouse in a divorce. Your attorney will request discovery responses towards the beginning of your case and your spouse will likely do the same for you. What you are doing with discovery is preparing for trial. The information and answers you receive will allow you to gain an understanding of what sort of case your spouse has while getting access to information that you will need to build your case. That way you all will know what to look out for in mediation and whether your spouse is likely to push your case to a trial.
When you submit discovery requests upon your spouse you do not get a police officer to follow him or her around and make sure that he or she is disclosing everything that they need to. True enough, they will need to sign an affidavit when turning in responses but that is it. If you suspect that your spouse is still withholding information you can alert this to the judge’s attention to see if you can get a subpoena directly from the judge to obtain access to your spouse’s computer or files.
In extreme cases, forensic analysts can look at your spouse’s devices to determine what degree of online activity they have surrounding cryptocurrency websites. This is an added step in a divorce and will add time and cost to the case. However, when we are dealing with a potentially valuable item like cryptocurrency the investment into hiring one of these folks could be worth the effort. More simple steps would include looking at bank account statements. Maybe there is proof that your spouse had bought or sold cryptocurrency that will show up on their statements?
Here is where you need to decide as to whether it is worth your while to go through with any of the above steps. For $5,000 worth of cryptocurrency, it probably wouldn’t make sense to try and pursue these extra steps of inquiry. You may want to just bring that up in mediation and see if the mediator can hold his feet to the fire and get some concessions on other community property to keep the ledger fair and square. You do not want to invest a great deal of time or money into a process that isn’t likely to yield a sizeable return as far as hidden assets.
Be intentional and plan when it comes to cryptocurrency
Especially when you are the spouse who does not earn as much money, you need to be intentional when it comes to coming up with a plan regarding how you are going to handle cryptocurrency or any subject related to your finances in a divorce. Your spouse needs to focus on These issues as well but just being realistic is more important for you as a spouse who earns less income. This means planning in being as intentional as possible about developing goals for your case.
The first thing you ought to do at the beginning of your divorce is to begin to document the property that you own. Going through your home and simply taking photos of closets, drawers, files anywhere else in the home is a wise decision. You never know when items should be taken, hidden, or even destroyed. On top of that, you will have to go through this type of information regardless of your divorce. This will be called the inventory and appraisement phase of your case and will eventually need to be formalized and turned in to the judge so that he or she can gain an understanding of your financial circumstances.
The more detailed you can be in this regard the better off. You may be able to start seeing holes or inconsistencies in what you thought the situation was with your family financially and what it is. From there, you can begin to make decisions for yourself in terms of how to ask questions of your spouse and to what extent you need to go into detail during you are discovery portion of the case. Your entire divorce does not need to be an extended back and forth with fighting and questions over the hiding of assets. Rather, you can ask simple questions and likely receive helpful information from the beginning of a case. That way you can avoid troublesome scenarios That increase the cost and stress of a case later.
You can begin to check your bank accounts if that is not something that you had been in the habit of doing. Many people that I have worked within divorce cases we're either the spouse who did all of the financial work for the family or the spouse who deferred completely to their partner. If you are the spouse who does not check in on the finances very often then this will be a great opportunity for you to learn what is going on with your family finances. This is important for your divorce and also very important for your post-divorce life.
The bottom line in a divorce scenario is there you should work as hard as possible 2 uncover information at the beginning of a divorce rather than waiting for the end of your case. So much work Can go into a case if you have information at the beginning. Rather, the difficult part about a divorce case is discovering information towards the end of a case when you do not have much time to prepare for mediation or a trial. You should begin to organize your finances as best as possible and engage your spouse in discussions about cryptocurrency and any other financial subject that you may have a question about.
Finally, working with an experienced family law attorney is another way for you to position yourself well in a divorce case where you may not know exactly what is going on from a financial standpoint. Many times, your divorce case will be That ermined by which spouse is most prepared in which This is underprepared. If you don't know exactly where to begin but you have suspicions about your spouse in cryptocurrency then you can contact an experienced family law attorney to develop a strategy and begin planning on how to hold your spouse accountable.
Questions about the materials in today's blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our experienced family law attorneys offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about how your family circumstances may be impacted by the filing of the divorce or child custody case. Thank you for visiting our blog today and we hope you join us again tomorrow.