These days, cryptocurrency is a factor in many high net-worth divorce settlements. The value of cryptocurrency is going up and more people are learning about how it works. Over 20 million people in the US may own cryptocurrency according to industry group estimates. The value of the digital currency market also increases to $2 trillion for the first time in April 2021. If you’re a New York resident and facing a high asset divorce, here are some things to keep in mind.
The challenge of valuing cryptocurrency
Whether spouses have invested large sums of money or have experimented with cryptocurrency, dividing the value can be challenging in a high net-worth divorce. Davon Barrett, certified financial planner and lead advisor at Francis Financial in New York shares that cryptocurrency can make asset division more complex for divorcing spouses. It’s best to consult with a financial professional with cryptocurrency expertise so you’ll know exactly how much you can expect to recover after the divorce.
It can be tricky to determine the value of cryptocurrency so it can be divided family in a high net-worth divorce. During the divorce proceedings, the worth of digital currency could significantly increase or decrease which means the courts may have a difficult time giving each spouse what they deserve. Adding a volatility formula in the divorce contract can make the process less complicated.
During divorce negotiations, couples also have to consider taxes. If one spouse purchased bitcoin a few years ago and the currency has grown this spouse may have to pay long-term capital gain taxes if they sell the cryptocurrency. Couples should also include their post-divorce tax bill in the divorce negotiations.