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Partner hiding crypto assets in divorce? 4 major steps to take
Separation can be messy, and it can be emotional, so what happens when one person wants to hide some of their assets, whether it’s in the form of cryptocurrency or something else?
By Paralegal, Zac Kertesz and Principal Lawyer, Justin Dowd AM.
The meteoric rise in the popularity of cryptocurrencies has made it easier than ever to hide assets. So, what can you do if you think your partner is hiding money in cryptocurrency?
Let’s explore the legal issues surrounding cryptocurrency in divorce proceedings for such scenarios, the penalty for hiding assets in a divorce in Australia and a step-by-step approach to what you should do if your partner is the one hiding assets. Keep reading.
1. Tell your lawyer
One of the most important parts of family law proceedings is disclosure. Once your matter progresses to court, there is an obligation on both of you to make full and frank disclosure of all assets. If you believe that your partner has money in cryptocurrency, tell your lawyer.
By doing this, your lawyer can prepare, and can also make further requests if cryptocurrency is not provided in disclosure. This gives your partner an opportunity to do the right thing and tell you, your lawyers, and the court how much he/she has invested in cryptocurrency.
What happens if you know they have money in cryptocurrency, but they don’t disclose it?
2. Mediate
Cryptocurrency makes things incredibly difficult if your partner chooses not to disclose because it’s almost impossible to trace and track. Therefore, the best option may be to try and mediate a solution because the court process can become incredibly expensive.
3. The penalty for hiding crypto assets in a divorce in Australia
The court will punish anyone that is not honest. If your partner is hiding assets, whether cryptocurrency or something else, the court will find out and punish your partner.
How does the court punish them?
In very simple terms, here is what the court will do if the judge is satisfied that your partner is hiding assets in cryptocurrency:
- Firstly, the court will estimate how much money is being hidden and add it to the asset pool. This means if your asset pool is $3 million, but the court estimates that your partner is hiding another $1 million in cryptocurrency, the asset pool during the property proceedings will now be deemed to be $4 million.
- Secondly, because you have been honest during the legal proceedings and your partner has not, the court will award you a greater percentage of the assets
- Thirdly, depending on the seriousness of the situation, the court may order a number of penalties and restrictions in order to force your partner to disclose their cryptocurrency.
4. Be patient
Professor David Hodson recently published an article on the impact that cryptocurrency is having on the family law landscape and one of the main takeaways is: be patient. Due to the nature of digital currency, it is almost impossible for the courts to gain access.
However, if you are patient, your partner will eventually liquidate that investment and when they do that, they are converting a digital asset to a physical asset. When this happens, the court can exercise its powers to ensure you are given what you are owed… Be patient.
Dividing cryptocurrency in divorce: A final word
As digital assets continue to gain popularity, it’s increasingly important for couples to consider how they’ll handle their cryptocurrency holdings in the event of a separation or divorce. Whether you’re getting divorced or simply interested in safeguarding your assets, it’s crucial to work with experienced legal professionals who can guide you through dividing your cryptocurrency holdings. With the right guidance and planning, it’s possible to ensure a fair outcome for all parties involved, as the penalty for hiding assets in a divorce in Australia is simply not worth it.
