Digital assets have become an integral part of family wealth in recent years. Some of the common digital assets include cryptocurrencies, NFTs, monetized channels and domain names that represent real monetary value. Just like tangible assets, digital assets are also subject to division. Despite their complexity, courts usually divide them using conventional legal framework principles. Here is what you need to know.
Community v. separate property
Just like real and personal property, courts divide digital assets into two categories: community and separate property. To understand how these principles apply in practice, consider how each category is treated:
- Community property: Digital assets they were obtained or mined during the marriage. It is equally shared by both spouses, regardless of whose name is on them.
- Separate property: Assets acquired prior to marriage or received individually via gift or inheritance, remain separate.
In the case of commingled assets, courts may use tracing methods to determine the share of both the spouses.
How are digital assets valued?
Severe price swings present unique valuation challenges during legal proceedings. In most cases, courts value assets as close as practicable to the date of trial. However, a court may also choose an alternate date (such as the date of separation) if there is good cause. When the value of digital assets fluctuates a lot, the court might opt for in-kind division, splitting the digital tokens equally among the spouses.
How an attorney can help
Handling digital wealth requires specialized legal oversight. An attorney experienced in California family law may help you build a property division plan where you are able to value complex assets accurately, negotiate fair terms and ensure that the final division of your digital holdings aligns with your long-term goals.