Can I get a divorce?
In the recent years, Bitcoin and other cryptocurrency have become increasingly popular investment assets. This means that divorce lawyers too have to deal with these assets more and more. If things continue to develop in the same manner, so called Bitcoin divorces are going to be the norm in the near future and divorce practitioners should be prepared to deal with the new challenges that technological development creates.
Even though this blog proposes to discuss cryptocurrency and divorce, we should first consider whether you can get a divorce in the UK and what divorce process in the UK entails.
Currently, to get a divorce in the UK, you have to meet certain criteria:
- To be legally married (a marriage that is recognised in the UK);
- To be married for at least 1 year;
- For the marriage to have irretrievably broken down;
- As a couple you have your permanent home in the UK or at least one of you has their habitual residence in the UK.
For more detailed information on the above criteria or what divorce process looks like, you can visit our blog on how to get a divorce or give us a call on 020 3372 5125 and have a free, no obligation call with one of our solicitors, who can guide you properly.
How will the assets be split?
If you have started divorce proceedings or even if you are simply considering it, it’s only natural that you would have also thought how it will affect your assets. Many people are even hesitant to divorce, even though they know the relationship is either dead or dying, precisely because they are unsure as to how the division of assets works and how their matrimonial assets will be split. To make things worse, there are many stories going around about bad divorces, disastrous divorce settlements etc. Things can be particularly stressful if it is mid or high net worth divorce.
Divorce settlements don’t need to be stressful. With the right approach and the right lawyers, in most cases they can be, not only quite quick, but also work long term. There are, of course always situations where agreements cannot be reached and things can get complicated, but here too having a top divorce lawyer can make a lot of difference.
So, how are the matrimonial assets split in the UK? The base principal here is that the matrimonial assets are normally split evenly between the spouses. But this seemingly simple principle can cause number of complications. For instance, it’s not always clear what is considered matrimonial asset. Then there are issues with identifying the assets, valuing them, dividing them etc. All in all, the process can be stressful indeed and can get real out of hand, creating further animosity between the parties, unless it’s managed correctly. You can find more details about division of assets and how to secure your fair share here.
What happens if there are cryptocurrency assets involved?
Theoretically, cryptocurrency is just another asset in the matrimonial pot. Meaning, there is no difference in the regime of how it is divided when the couple decides to split up. When deciding on financial settlement after the divorce, the UK law does not distinguish assets that are in the UK or abroad. Everything the couple owns, anywhere in the world will be taken into account when splitting the assets.
The difficulty with the cryptocurrency and divorce is that cryptocurrency is unregulated for now. This means we do not have a regulator that determines how these assets are traded, what is the process for it and so on. Part of its appeal is exactly that. Bitcoins and other cryptocurrency offer more anonymity and security compared to the other, more traditional financial investments. On the other hand, this means that it can be more difficult to find during divorce proceedings.
As part of the divorce process, the parties are obligated to disclose all the assets they hold. This includes all the assets they hold, whether they form part of the matrimonial pot or not. This is because the distinction between the matrimonial and non matrimonial assets is not always as clear as it can seem. However, should the party decide to not comply by this demand and hide assets, the other party might find it very difficult to find and prove the existence of cryptocurrency.
Normally, where there are any indications that one party might be hiding assets, a forensic investigation into that party’s assets might be required. This can add to the time and costs of the proceedings. It has to be said that should it be proven that one party has attempted to hide assets, it can possibly be a reason for the courts to depart from the equality principle we mentioned above. Meaning, the guilty party might get less in assets then they otherwise would have been entitled to.
Protecting your Crypto Assets in Divorce
If you own cryptocurrency and now are unsure what will happen to it if you divorce, the first thing you should consider is whether it was purchased during your marriage or before it. If the bitcoin or any other cryptocurrency was purchased during marriage then it will become matrimonial asset. It will not matter what the source of money was for the purchase, neither what the contribution of the parties was for it. It will be matrimonial asset and therefore fall under the presumption of 50/50 split.
If you come into the marriage with cryptocurrency, then it will be non-matrimonial asset and will not be divided with the other assets accumulated during the marriage. However, this will only be the case if there is no change to your portfolio during your marriage. Things will become more complicated if you actively trade during your married years, withdrawing and re-investing into these assets etc. In such cases, careful consideration of factual circumstances and even involvement of experts will be required.
If you wish to protect your crypto assets, one way of doing it is by signing a pre- nuptial agreement, or if you are already married, post-nuptial agreement. These agreements, whilst not truly legally binding, can be used by the courts to assess the parties intentions and can be very helpful during divorce proceedings.
Another aspect of protecting your cryptocurrency is related to the actual division of the assets. If you wish that the full amount of cryptocurrency remains with you, then you can set off against the value of your ex-partner’s share with your share of other assets. For instance, your partner might want to retain a certain property in your real estate portfolio, you can give up your share or part of it, against the value of the cryptocurrency you wish to retain. As you can see, valuation of matrimonial assets is one of the most important aspects of asset splitting. It has to be done at the right time and in a right way. Having our experienced divorce lawyers guide you in this can be invaluable.
What happens if there is a prenuptial agreement?
Above, we’ve touched upon the fact that pre-nuptial agreements can provide a way of protecting your crypto assets. Let’s have a quick look at how it works.
Pre-nuptial agreements are contracts between the parties that determines what will happen to the couple’s assets, should the relationship end. As mentioned above, technically, they are not legally binding. However, they do provide a strong guidance to the courts on how to handle the assets in an event of divorce and separation.
It is essential that the pre-nuptial agreement is drafted properly, with parties being advised accordingly and understanding what they sign.
Our lawyers have vast experience in drafting pre-nuptial agreements. We have a team of specialist lawyers who rely on their experience in using such agreements at court, to tailor pre-nuptial agreements to your needs in such a manner that it will offer you the best protection.
For further assistance with cryptocurrency and divorce, assets separation or pre-nuptial agreements, please contact our team of specialist divorce lawyers by filling the contact form or calling us at 020 3372 5125.