Arizona is a community property state, which means that spouses must generally aim for a 50/50 division of marital assets during a divorce. However, the division does not always have to be exactly equal—it must be fair and equitable, considering each spouse’s circumstances. Couples navigating an Arizona divorce can benefit from consulting a Chandler divorce lawyer to help guide them through the division of assets and ensure their rights are protected.
Divorcing spouses in Arizona may reach this division of their assets in an uncontested divorce through a settlement agreement with the help of their attorneys and a professional mediator or by bringing disputes to court for a judge to decide in a contested divorce. Regardless of whether the division of marital assets stems from a settlement agreement or is decided by a judge in divorce court, the first step is for both spouses to submit full financial disclosures.
These disclosures must reveal all assets, including cryptocurrency and digital accounts; however, these relatively new additions to many financial portfolios can cause confusion and conflict during asset division in Arizona and elsewhere.
Not all assets are considered marital property. Separate assets belong solely to one spouse, typically because they:
Common examples of separate property include real estate, vehicles, family heirlooms, investment accounts, or businesses.
Marital assets, on the other hand, include property and accounts accumulated during the marriage, such as:
In some cases, separate assets may become commingled, giving a spouse the right to claim part of the asset or a portion of its increased value. This often occurs when one spouse contributes time, money, or effort to improve the other spouse’s asset.
For spouses with complex portfolios or digital assets, determining which assets are marital versus separate can quickly become complicated.
Cryptocurrency is a digital asset that does not require a bank or other financial institution to conduct or verify transactions. Instead, a digital technology known as blockchain technology tracks and records all transactions, such as trades, payments, and purchases.
Cryptocurrency is a fast, easy, peer-to-peer virtual asset system that simplifies the ability to send and receive payments worldwide without the need for currency exchange systems or fees. Instead, transactions are recorded and stored digitally through encryption or complex coding.
Under Arizona’s community property divorce laws, cryptocurrency accounts begun during the marriage or accessible to both spouses during the marriage are marital property, requiring equal division. Each spouse must fully disclose cryptocurrency holdings during the financial disclosure period of the divorce process. I
n addition, each spouse’s attorney may request further financial documents from the other, including for their digital assets like cryptocurrency, and the other spouse is obligated to comply by producing any requested information.
In order to fairly divide marital assets between divorcing spouses in Arizona, spouses must meet the following three crucial aspects of assessing and dividing each asset:
Cryptocurrency poses unique challenges in meeting the three aspects required for fair division in an Arizona divorce.
First, cryptocurrency’s identification methods are alias-based, using unique digital addresses for users rather than their real names. This sometimes incentivizes a spouse with substantial cryptocurrency holdings to attempt to hide their digital assets under the assumption that they are untraceable. Identifying cryptocurrency as an asset relies primarily on the spouse’s disclosure. If one spouse suspects that the other has cryptocurrency accounts that they’ve failed to disclose, it may require an investigation by an experienced financial forensics accountant to reveal these assets.
Valuation of cryptocurrency is also challenging, due to the volatile nature of the digital asset world. Even in cases of full disclosure, the value of cryptocurrency may substantially change between the date of the valuation and the date of distribution during the finalization of the Arizona divorce.
Once one or both spouses disclose cryptocurrency as part of their marital holdings, the spouses, together with their attorneys and a professional mediator, must try to divide its value fairly between both spouses or let the judge determine the division during the divorce. First, an accurate assessment of its value must take place for equal division. Then, the distribution of the digital asset’s value occurs through one of the following methods:
Because cryptocurrency is still relatively new to the court’s consideration during divorce in Arizona, there remains limited legal precedent. It’s not uncommon for challenges to arise when dividing cryptocurrency and other digital assets, especially when one spouse fails to disclose the asset or one spouse isn’t as familiar with digital currency trading as the other.
A divorce lawyer in Arizona has experience in all aspects of dividing community property and access to financial forensic accountants for divorce disclosure to identify and assess the value of cryptocurrency and other assets. Call Wilson-Goodman Law Group, PLLC for skilled legal representation to protect your best interests throughout all aspects of your Arizona divorce.
