As digital assets like cryptocurrencies, NFTs and online business accounts become more common, their treatment during a divorce in Virginia has garnered more attention. And, if you are about to go through the divorce process here and have these digital assets, you also likely wonder how digital assets are treated during property division.
Understanding our state’s approach to digital assets
Virginia adheres to an equitable distribution model of fair division of marital property. Digital assets fall under the same rules, with classification as either marital or separate property. Marital property includes any digital assets acquired during the marriage, while separate property refers to assets acquired before marriage or through gift or inheritance.
Valuation challenges of digital assets
Digital assets, particularly volatile ones like cryptocurrencies, are complex to value. Courts may rely on professional appraisers to determine the current market value, as the worth of assets like NFTs and digital businesses can shift quickly. This valuation is essential to ensure that each spouse receives a fair portion, especially with assets that might continue to appreciate.
Specific treatment of cryptocurrencies
Cryptocurrencies are treated as property, and courts might order transfers between spouses to divide them equitably. Given their fluctuating values, accurate records of crypto holdings are critical, and the transfer often requires technical knowledge to ensure compliance and accuracy.
Addressing joint digital accounts
Digital assets, like joint social media accounts or online business profiles, established during the marriage are typically considered marital property. Courts may split the account’s value, or one spouse may compensate the other to retain full control. This can be particularly relevant for high-profile or monetized accounts.
Legal considerations for digital assets
Our state adopted the Uniform Fiduciary Access to Digital Assets Act, which granted fiduciaries the same rights to digital assets as they have to tangible ones. This law allows for the management, transfer and disclosure of digital assets in a way that aligns with the owner’s intent and the court’s directives.
Practical tips for dividing digital assets
When managing digital assets in a divorce, couples should consider potential tax implications and future value changes. Capital gains tax may apply when transferring cryptocurrencies, for example. Additionally, digital businesses and NFTs may have growth potential that impacts asset division outcomes.
Conclusion
Navigating digital assets in property division requires both legal insight and practical considerations. Understanding the nuances of these assets can help you and your spouse reach a fair and informed agreement during your divorce in Virginia.
