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How do digital wallets play into divorce?

On Behalf of | Aug 3, 2022 | Divorce |

Divorcing couples often have a lot to stress about during the split. One of the biggest sources of stress for many is the division of assets.

These days, when dividing assets, it is also important to pay attention to digital wallets and cryptocurrencies, too.

What is asset hiding?

CNBC discusses the way cryptocurrency plays into divorces. First of all, if a spouse is not attempting to hide assets, their digital wallet should be just as up for division as their physical wallet. Any assets should end up documented during the asset division process and divided in an equitable way.

However, many spouses feel like they do not owe their soon-to-be ex any of their money, digital or otherwise. This can lead to asset hiding. This is the act of attempting to hide either portions of assets or sources of income through various means of trickery.

Use of digital wallets

In recent years, more people try to hide their assets in digital wallets and cryptocurrency. They will buy into bitcoin or other crypto stocks with the intention of cashing out after the finalization of the divorce. They assume that even if a forensic financial analyst looks at their finances, this digital nest egg will not get spotted.

This may have worked years ago, when the digital and crypto markets were still relatively niche things. But in recent years, they have grown so mainstream that the IRS even started to tax cryptocurrency in 2021. Because of that, it is easier than ever to track down hidden assets even in digital wallets and get the spouse to pay their fair share.