How is Cryptocurrency Addressed in a Texas Divorce?

 Posted on November 28, 2024 in Family Law

Cryptocurrency has become an increasingly popular investment. Bitcoin, Ethereum, and other digital currencies allow people to play the market and potentially turn a significant profit. Although it is much more common and there is more awareness about cryptocurrency now than there was only a few years ago, it is still a relatively new topic as far as divorce is concerned.

Since Texas follows a community property model for the distribution of a marital estate, anything a couple obtained when they were married is to be divided equally between the spouses. However, cryptocurrency is not traditional money and it can be difficult to understand how to address it. If you have questions about the impact of divorce on cryptocurrency, a qualified Llano, TX family law attorney can answer.

Cryptocurrency and Community Property

Since Texas is a community property state, the courts consider everything acquired by either spouse during a marriage to be jointly owned by both spouses. With few exceptions, these marital assets are to be divided equally between the two in a divorce. If cryptocurrency was purchased or mined during a marriage, it is typically considered the joint property of both spouses.

How Is Cryptocurrency Valued?

Digital currencies are quite volatile, meaning their value can change quickly. For example, it is reasonable for a Bitcoin to be valued at $50,000 one morning, drop to $40,000 the next, and be worth $60,000 the day after. These values become very important when divorcing spouses need to divide all their assets equally among themselves.

To help with accurate valuation, the court might consider records of the original purchase price, the cryptocurrency’s market value at the time of the divorce, and the fluctuations its value has seen throughout the marriage. The spouses might also need to call on an expert to help determine the value more specifically, to help understand how to divide it equally.

How Is Cryptocurrency Divided?

Once the digital currency has been valued, the court will decide how it should be divided. When both spouses agree on the value and how it should be divided, this process can be fairly simple. A common strategy is for one spouse to keep it and the other to be awarded an equivalent value in money or assets.

If the spouses cannot agree, the court might order them to sell the digital currency and divide the proceeds from that sale.

Often, only one person controls the "wallet" that the cryptocurrency is assigned to, but if it was bought or mined during the marriage it is still considered jointly owned by both spouses and can make a significant impact on a divorce settlement.

Contact a Marble Falls, TX Divorce Lawyer

If you are considering divorce but anticipate challenges dividing certain assets like cryptocurrency, speak with an experienced Llano County, TX divorce attorney. At Law Office of Russ Alan Baker, PLLC, we have helped many clients reach agreements about how to divide complex assets and we are passionate about finding optimal solutions. Call us at 325-216-2006 to schedule a private consultation.