There is much to look forward to in a marriage. However, navigating digital asset management with a spouse may be as complex as it is exciting. Joint management of digital assets — such as cryptocurrencies, nonfungible tokens (NFTs), social media accounts and online media — requires communication and transparency, mutual decision-making and some legal knowledge. Understanding digital assets is especially important for dividing them during a contentious and difficult divorce.
The Importance of Transparency and Joint Decision-Making
According to a study of 2,000 coupled Americans, 32% reported feeling uncomfortable discussing finances with their partner, while 44% said they worried these conversations would lead to disagreements.
Transparency and mutual decision-making are the foundation of a happy marriage, leading to better management of digital assets. By openly discussing crypto and NFT investments — including holdings and transactions — couples foster trust and mitigate financial risks.
Married partners should set goals for major purchases — like a house or new car — and retirement. Gauging each other’s comfort with market fluctuations and reviewing the portfolio together will also help couples make revisions for their changing financial needs.
Legal Implications of Digital Asset Division in Case of Separation
No couple gets married anticipating a divorce. However, if it happens, splitting digital assets is typically one of the most challenging and complex facets of separation proceedings. Reasons for this include:
- Different legal standings for crypto and NFTs based on jurisdiction
- Market volatility impeding accurate valuation
- Insufficient appraisal models
- Difficulty determining whether crypto and NFTs are marital or nonmarital assets
- Discrepancies and hidden crypto assets
Take one woman, Sarita, who realized her spouse had too few assets for someone with a $3 million annual salary. After six months of divorce proceedings and hiring a forensic accountant, she discovered her husband was hiding half a million dollars in 12 undisclosed bitcoins. Sarita said she felt blindsided, which is common among those with less knowledge about cryptocurrencies.
Digital assets may impact spousal support — those who qualify typically receive 40% of the earnings disparity if the couple doesn’t share children. The amount granted may change depending on one’s earnings from cryptocurrencies and NFTs.
Ideally, couples should have a prenuptial or postnuptial agreement in place to clearly specify ownership and how virtual investments are divided to help prevent disputes. Because marital digital asset management is so complicated, it is best to consult with a legal expert.
Documenting and Storing Digital Assets
Recording transactions and ownership of cryptocurrencies and NFTs make separating them much more straightforward during a divorce. Even if a couple intends to stay together for the long run, it’s wise to store all activity for easy reference.
Storage security is of the utmost importance, such as hardware wallets for long-term assets. Multisignature wallets, in particular, are ideal for maintaining equitable control and require both spouses to sign off on transactions.
Although two-factor authentication, encryption, strong passwords and account locking help protect accounts, there are still vulnerabilities. Even Coinbase has endured cyberattacks, with hackers transferring money from 6,000 users’ crypto wallets during a breach of the SMS account recovery feature.
Additionally, a digital estate plan will serve as a helpful guide for managing assets if one partner dies or becomes incapacitated. This plan should include special instructions for accessing digital accounts, deleting social media profiles, transferring or dissolving virtual investments and safeguarding personal information.
Tracking and Verifying Ownership Using Blockchain Technologies
Blockchain offers a great way for couples to decide how to split digital assets during divorce through automatic agreements. Decentralized finance tools also allow married partners to view and oversee their investments, preventing one spouse from taking total control.
While not foolproof, blockchain technologies have been tested and proven to offer excellent security. As a result, couples instill greater trust in one another and reduce wealth management conflicts.
Honest Digital Asset Management Is Key to Better Marital Wealth
Money woes can easily become a married couple’s undoing, especially if there isn’t transparent communication between them. It’s important to manage digital assets as a team, from discussing investments to making decisions together and seeking legal counsel. The sooner couples begin the conversation, the better they can manage their virtual finances long-term.
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Disclaimer: The information provided on AlexaBlockchain is for informational purposes only and does not constitute financial advice. Read complete disclaimer here.
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