By Mark Hunter
12 hours agoSat Jul 13 2024 08:00:06
Reading Time: 2 minutes
- It’s tempting to hide your crypto activities during a divorce to try and keep as much as possible
- Most states class crypto as an asset, meaning you must legally declare it up front
- Technically you could hide it, but it would be very hard to do and would see you break the law
It can be tempting for someone who has earned a small fortune in cryptocurrency to hide it from their spouse, particularly if the relationship is actively being dissolved. You might think that keeping your activities quiet will lead to your crypto haul not being discovered, or you might think that the nature of cryptocurrency means that you will be able to keep everything you earned. However, while the law can change from state to state, the overriding message is that it isn’t worth the risk.
Widow Discovered Husband’s Secret Bitcoin Haul
Hiding assets from a spouse in order to prevent them from being divided during a divorce is, of course, nothing new. However, the advent of cryptocurrency has made it easier for one half of the partnership to squirrel away valuable holdings on the quiet.
This issue was highlighted in 2021 when MarketWatch’s money replied to a missive from a widow who had discovered that her former husband had amassed a secret crypto fortune while essentially living a double life. After he died, she discovered that he had some $50,000 in bitcoins hidden away that he hadn’t told her about. The question was, was she entitled to her half?
The Moneyist responded by saying that the rules can vary from state to state, but in Washington where the widow lived “everything earned during the marriage is community property”, and as such, she had a “strong case” that she was entitled to half the bitcoin stash. The same rule would very likely apply to states that consider bitcoins as property or an asset, which is virtually all of them.
Of course, if you’re dead, you won’t be worried about your bitcoin holdings, but the situation is the same with divorce—whatever you acquired during the marriage is split 50/50%, with crypto, again, usually classed as an asset or property.
Don’t be Tempted to Hide To Your Crypto
It might be tempting to hide your crypto throughout divorce proceedings, wait until it has been well and truly dissolved, and start spending it. In theory, there is nothing to stop you doing this, but it would contravene the laws in any state that requires all assets to be laid out at the start of divorce proceedings…which is every state that offers divorce…which is all of them.
Splashing the cash after a divorce might raise some eyebrows and could interest authorities if they suspect you’ve withheld the truth about your assets, which could well lead to forfeiture and legal costs down the line.
Even if you don’t go to those extremes, trying to hide a crypto portfolio during a divorce case when there could be all manner of breadcrumbs that could be uncovered by the courts, it’s just not worth the risk.
