Cryptocurrency has become an increasingly popular and mainstream investment option. People who once scoffed at the idea of digital capital are now eager to diversify their portfolios with Bitcoin, Ethereum and similar investments.
Some people purchase cryptocurrency to avoid investing solely in one domestic market. Others might turn to cryptocurrency to hide the extent of their financial resources. Unlike traditional bank and investment accounts, which produce routine statements and their subject to the management of a specific financial professional, cryptocurrency holdings are not necessarily centralized and easy to track.
How can those preparing for divorce locate cryptocurrency investments before agreeing to specific terms as part of the property division process of a divorce?
1. Check withdrawals and investment purchases
As cryptocurrency has become more mainstream, numerous different platforms have arisen to facilitate trading. Looking for sizable bank withdrawals or charges related to businesses that facilitate cryptocurrency trading can help spouses identify hidden holdings.
2. Examine tax returns
Cryptocurrency may be a relatively new investment, but the IRS has already caught onto it as a means of hiding value. Investors have an obligation to disclose cryptocurrency on federal tax returns. A review of a return could identify the extent of cryptocurrency holdings.
3. Work with a forensic accountant
If simpler measures do not yield concrete results, concerned spouses may want to work with a financial professional. Experts who trace income and money can potentially identify cryptocurrency investments and help quantify the amount of money spent investing.
Locating all property is important for a fair divorce outcome. Spouses concerned about digital assets may need outside assistance to locate and effectively value all marital property, and that’s okay.