If you’re going through the divorce process in Michigan, you and your former spouse are likely getting ready to divide assets. Some people going through a divorce either have cryptocurrency themselves or spouses who own this type of currency. Unfortunately, the recent popularity of cryptocurrency is making divorces increasingly complicated. Here are some of the challenges you could face when dividing cryptocurrency in a divorce.
The IRS wasn’t always concerned with taxing cryptocurrency. However, in recent years, this organization now similarly taxes cryptocurrency as it would other types of investments. Considering that, you could be dealing with a sizeable tax bill after receiving cryptocurrency in a divorce settlement.
Determining the value of cryptocurrency
Another concern when dividing the value of cryptocurrency is its value. Cryptocurrency remains quite volatile, meaning many forms of this currency have values that can change drastically in a short period. If someone, for example, owned $400,000 worth of cryptocurrency, it could rise to millions or drop to thousands of dollars in value while divorce negotiations are ongoing.
It’s also worth noting that transferring cryptocurrency can get complicated. Make sure you’re working with a finance professional who knows how to handle transfers of this type of currency. Also, make sure that you’re only giving your wallet-related information to those you can trust.
As you can see, there are several important factors to consider when handling cryptocurrency in a divorce. By understanding the volatility of this currency, how it impacts taxes, and the importance of making transfers correctly, you’ll be better able to ensure that the cryptocurrency you or your spouse owns gets divided fairly.