During a divorce, you and your former partner need to split up your assets and debts before you may move forward with life on your own. The process of asset division sometimes proves complicated. This may prove especially true if you or your former partner are among the estimated 20 million Americans who currently hold cryptocurrency.
Per CNBC, figuring out how to divide cryptocurrency, or digital currency has become a growing point of contention in modern divorce cases. What are some of the challenges that come with dividing digital assets?
Placing a value on it
The value of cryptocurrency may fluctuate quite a bit from one day to the next. Thus, it is often hard to place a clear value on it and divide it accordingly. Rather than decide on a specific dollar amount, you may want to divide it based on a specific percentage of its value.
You may also encounter challenges when it comes to transferring digital currency from one party to the next. Because this is a relatively new divorce issue, there is no clear and obvious precedent set as far as how to do it.
Understanding tax implications
Owning and transferring cryptocurrency may also have sizable tax implications. In some cases, cryptocurrency holders may have to deal with capital gains taxes. You or your spouse may also encounter legal trouble if you fail to report the cryptocurrency you hold when you file.
While valuing and dividing cryptocurrency may prove complex, this type of asset may hold considerable value. Therefore, overcoming these challenges may help ensure you receive everything owed to you in your split.