Digital Assets in Maryland Divorce Cases: How Does a Maryland Divorce Court Handle Crypto?
As cryptocurrency and other digital assets become more commonly-owned by individuals and couples in Maryland, many divorcing spouses in Maryland are asking how these assets are treated during a divorce. Bitcoin, NFTs, and other forms of digital currency may not look like traditional property, like a car or a piece of fine art, but the truth is that under Maryland law, they can still play a significant role in the division of marital assets. To help individuals in Maryland better understand the Maryland divorce process, we explain how cryptocurrency is typically dealt with in Maryland divorce cases.
Are Cryptocurrencies Considered Marital Property in Maryland?
Maryland is an equitable distribution state, which means marital property is divided fairly, though not necessarily equally, during a divorce. In general, any property acquired during the marriage may be considered marital property, regardless of whose name is on the account. As such, cryptocurrency acquired during the marriage is typically treated like other financial assets, such as stocks or investment accounts. Even though crypto may be held in a digital wallet or on an exchange, it does not escape the reach of divorce courts simply because it exists online.
If cryptocurrency was acquired before the marriage, it may be considered separate property. However, issues can arise if marital funds were later used to invest in or grow those assets.
Challenges with Identifying Digital Assets
One of the biggest challenges in handling crypto during divorce is identifying and locating it. Unlike traditional bank accounts, cryptocurrency wallets may not generate standard monthly statements. Assets can be stored on exchanges, digital wallets, or even physical hardware devices. Because of this, disclosure is especially important. Maryland divorce courts require full and honest financial disclosure. Failure to disclose digital assets can lead to serious consequences, including court sanctions or an unequal division of property.
Fortunately, an experienced Maryland divorce lawyer can help request proper financial disclosures and, when necessary, work with financial professionals to uncover digital assets.
How Are Digital Assets Valued in Maryland Divorce Cases?
Another complication is valuation. Cryptocurrency values can fluctuate significantly, sometimes changing dramatically in a short period of time. Maryland divorce courts must determine how and when to value these assets for purposes of property division. Maryland divorce courts may consider the value of cryptocurrency at a specific point in time, such as the date of separation or the date of trial. An experienced Maryland divorce lawyer can help argue for a valuation approach that is fair based on the circumstances of the case.
The Division of Cryptocurrency in a Maryland Divorce
Once identified and valued, digital assets, such as crypto, are typically subject to equitable distribution in Maryland divorce cases. This may involve dividing the cryptocurrency itself, offsetting its value with other assets, or ordering one spouse to compensate the other for their share. Importantly, because crypto is intangible and highly volatile, careful planning is often needed to avoid unnecessary losses or tax complications.
Why You Should Speak with a Maryland Divorce Lawyer
There is no question that divorce cases involving cryptocurrency can be complex and require careful handling. An experienced Maryland divorce lawyer can help you ensure that your rights are protected, when it comes to dividing property, including crypto, in your Maryland divorce case. The experienced divorce lawyers at the Law Office of Vanessa R. Dozier, LLC, are here to help individuals in Maryland and Washington, DC with their complex divorce matters. Contact the Law Office of Vanessa R. Dozier, LLC, today and speak with a lawyer about your case now.