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Understanding the complexity of cryptocurrency in a divorce

On Behalf of | Sep 30, 2021 | Divorce |

Purchasing cryptocurrency as an investment has become more popular in the last few years. This increased accumulation of assets has also created more complexity, especially for a couple getting divorced. If you’re in this situation in Wisconsin, you may want to learn more about your options and how buying crypto can affect a divorce settlement.

Determining cryptocurrency values can be challenging

Splitting assets associated with the stock market is much easier to complete than with cryptocurrencies if you’re getting a divorce. One of the most significant reasons for this difference is the volatility found with cryptocurrency values. Price changes can occur quickly, leading to fluctuations in value ranging from 10% to 30% within a matter of days. Nailing down the correct value for the cryptos held by you and the individual you’re divorcing may require assistance from a professional who has experience determining these types of valuations.

Taxes

Holding and selling cryptocurrencies also has tax implications. This aspect can become complicated to get right if you’re getting a divorce. Examining the difference between long and short-term holdings and the post-divorce tax bill are two places to start. Another area to consider is the impact of filing taxes jointly. If the IRS decides to come back with questions after your divorce, you don’t want to have any challenges obtaining the information and documentation needed to answer them.

Transferring cryptocurrencies after the divorce have occurred

Moving cryptocurrencies from one account to another after your divorce has occurred may be challenging. Protecting private keys, passwords and the funds held in each account is critical. Making these exchanges may require the assistance of a financial professional.

Knowing some of the complex challenges you’ll face during a divorce settlement when you own cryptocurrencies should make you more informed and prepared to handle them efficiently and correctly.