How Are Digital Assets Split in a California Divorce? NFTs & Cryptocurrency

Digital assets have become more and more common in California divorce cases over the last several years. In the age of advanced digital technology, digital assets are often included as part of a couple’s community property. If you or your spouse have digital assets, such as nonfungible tokens (NFTs) or cryptocurrency, find out how they will be divided in a divorce case according to California law. For assistance with this unique type of property division, contact a divorce attorney in LA.

What Are Digital Assets?

Digital assets refer to anything owned in the digital sphere. Digital assets can include e-books, photographs, videos, music, movies, and digital documents that are on your computer. Some of these may be high-value digital files, such as files containing sensitive information or intellectual property. Digital assets can also include cryptocurrencies, such as Bitcoin and Ethereum.

Depending on the type and amount of your digital assets, they can be worth a considerable amount. If you have an NFT, for example, this means your digital asset is unique, irreplaceable and may be worth a lot. By law in California, you are required to disclose 100 percent of your digital assets during your divorce case. Intentionally concealing digital assets is illegal and could lead to criminal penalties.

How Does California Law Divide Digital Assets?

California is a community property state. This means that rather than dividing marital assets and properties in a way that is equitable, or fair, the courts divide community property in half, no matter what. If your divorce case goes to trial, you and your spouse will have to split all of your community property down the middle – 50/50 – regardless of who brought the asset or debt into the marriage. Digital property is no exception.

You and your spouse can decide how to divide your community property, including digital assets, on your own before the matter will go before a judge. If you are amicable and can reach a settlement agreement with your spouse, you will remain in control of how your digital assets are divided. Otherwise, your divorce case will go to trial. This includes digital assets, NFTs and cryptocurrencies.

Keep in mind that many digital assets are easy to copy and share at no cost. Using hardware such as a thumb drive or the Cloud, you and your spouse can easily swap many types of digital assets so that ownership does not have to belong to one spouse or the other. If you and your spouse can work together to achieve an uncontested divorce, you may not have to give up many of your digital assets. It may be necessary to divide certain types of assets, however, such as Bitcoin.

How Is Bitcoin Valued During a Divorce?

If you or your spouse own Bitcoin or another type of cryptocurrency, it must be valued for community property division. Valuing Bitcoin for a divorce settlement is a complicated process. You may need to use a cryptocurrency expert or a divorce attorney who has experience handling digital currencies for assistance.

The main issue is the fluctuating value of cryptocurrencies based on the current market. An attorney can solve this problem by adding a volatility formula to your divorce contract. This formula allows for changes in the value of your cryptocurrencies and automatically makes corresponding adjustments in how other assets are divided.

How Can a Los Angeles Divorce Attorney Help?

If your divorce case involves digital assets, contact a complex property division lawyer in Los Angeles for help. Digital assets can be difficult to trace and value. The divorce lawyers at Boyd Law can help you properly handle digital assets and cryptocurrencies. We can help you and your spouse work together and compromise on a settlement agreement. Or, if a settlement is not possible, we can represent you during a divorce trial in LA.