As more of our lives and finances move online, understanding how digital assets are treated in divorce has become essential for protecting your interests.
Key Takeaways:
- Digital assets include everything from cryptocurrency and online investment accounts to social media profiles, digital media libraries, and rewards points.
- Utah follows equitable distribution principles, meaning digital assets acquired during the marriage are generally subject to division just like physical property.
- Proper identification, documentation, and valuation of digital assets early in the divorce process helps ensure you receive your fair share.
When most people think about dividing property in a divorce, their minds go to the house, the cars, the retirement accounts, and maybe the furniture. But in today’s increasingly digital world, a significant portion of a couple’s wealth and valuable possessions may exist entirely online. When a marriage ends, these assets need to be addressed just like any other property, yet many couples and even some attorneys overlook them entirely.
At Green Legal Group, we understand that divorce in the modern era requires attention to both traditional and digital assets. With over 40 years of combined legal experience, our team stays current on emerging issues like digital asset division to ensure our clients receive comprehensive representation. We are committed to excellence in everything we do, including making sure no valuable asset, whether physical or digital, slips through the cracks. If you are facing a divorce and have questions about how your digital assets will be handled, we are here to provide the trustworthy guidance you need.
What Counts as a Digital Asset?
Before diving into how digital assets are divided, it is helpful to understand what actually qualifies as a digital asset. The term covers a broad range of items, and you may be surprised by how many you and your spouse have accumulated over the years.
- Cryptocurrency is perhaps the most obvious example. Bitcoin, Ethereum, and hundreds of other digital currencies have become legitimate investment vehicles for many people.
- Online financial accounts, including brokerage accounts, PayPal balances, Venmo accounts, and online banking, all fall into the digital asset category. While the underlying money is traditional currency, access to and control over these accounts is entirely digital.
- Digital businesses and income streams have also become common. If you or your spouse runs an online store, earns money from a blog or YouTube channel, sells products on Etsy, or generates income through affiliate marketing, these ventures have value that needs to be considered.
- Rewards programs and loyalty points often get overlooked, but they can be worth real money. Airline miles, hotel points, credit card rewards, and retail loyalty programs can add up to thousands of dollars in value.
- Digital media libraries include purchases made through services like iTunes, Amazon, Google Play, and similar platforms. Music, movies, e-books, and apps that you have paid for over the years represent real money spent, even if the items themselves are intangible.
- Social media accounts and online presences can have value, particularly if they are associated with a business, a personal brand, or generate income through advertising or sponsorships. An Instagram account with a large following or a profitable TikTok presence may be worth more than you realize.
- Domain names and websites are digital properties that can appreciate in value. A memorable domain name or an established website with traffic and revenue could be a significant asset.
- Online gaming accounts might sound trivial, but some contain items, characters, or currency worth real money. Games like World of Warcraft, Fortnite, and others have thriving economies where players buy, sell, and trade digital items.
- Cloud storage accounts often contain valuable files, including photos, documents, and other important records that both spouses may have an interest in accessing.
How Utah Law Treats Digital Assets
Utah is an equitable distribution state, which means that marital property is divided in a manner the court considers appropriate and reasonable based on the circumstances of each case. Digital assets are generally treated the same as other types of property when it comes to division.
The first step is determining whether a digital asset is marital property or separate property. Generally, assets acquired during the marriage are considered marital property and are subject to division. Assets that one spouse owned before the marriage or received as a gift or inheritance may be considered separate property and may not be divided, though this can get complicated if separate and marital assets have been commingled.
For digital assets, tracing ownership and acquisition dates can be more challenging than with traditional property. Cryptocurrency purchased before the marriage but held in the same wallet as currency purchased during the marriage presents questions about what portion is marital and what is separate. Online accounts created before the marriage but grown significantly during the marriage raise similar issues.
Once digital assets are identified as marital property, they must be valued. This is straightforward for some assets, like checking account balances, but more complicated for others. Cryptocurrency values fluctuate constantly, so the date chosen for valuation matters significantly. Digital businesses require analysis similar to traditional business valuations, considering revenue, growth potential, and market comparisons. Rewards points have stated values from the issuing companies, but their actual worth depends on how they are redeemed.
Challenges Unique to Digital Assets
Dividing digital assets presents challenges that do not arise with traditional property. Understanding these challenges helps you prepare and ensures nothing is overlooked.
Discovery and identification is often the first hurdle. Unlike a house or a car, digital assets can be difficult to find if one spouse is not forthcoming. Cryptocurrency can be stored in anonymous wallets. Online accounts may not appear on bank statements. Rewards points may be spread across dozens of programs. Thorough discovery is essential to uncover the full picture of a couple’s digital holdings.
Access and passwords create practical complications. Many digital assets require login credentials to access, and if one spouse controls those credentials, the other may be locked out. Courts can order disclosure of passwords and login information, but enforcement can be difficult. Changing passwords or transferring assets without authorization during divorce proceedings can have serious legal consequences.
Transferability varies by asset type. Some digital assets can be easily transferred from one person to another, while others cannot. Cryptocurrency can typically be sent to another wallet, but many online accounts are non-transferable. The terms of service for streaming platforms, gaming accounts, and social media profiles often prohibit transferring ownership, meaning some digital assets may need to be offset with other property rather than divided directly.
Valuation volatility is particularly relevant for cryptocurrency. The value of digital currency can change dramatically in short periods, which creates disputes about when valuation should occur and how to account for fluctuations during the divorce process.
Privacy and security concerns arise because digital assets often contain sensitive personal information. Both parties have legitimate interests in protecting their privacy while also ensuring a complete accounting of marital assets.
Steps to Protect Yourself
If you are going through a divorce and have digital assets to consider, there are steps you can take to protect yourself and ensure a complete and accurate division.
Create a comprehensive inventory of all digital assets you and your spouse own. Go through your email for account confirmation messages, review credit card and bank statements for subscription charges and online purchases, and think through all the platforms and services you use regularly.
Document everything with screenshots, account statements, and transaction histories. This creates a record of what exists and its value at a particular point in time.
Do not delete, transfer, or alter digital assets once divorce proceedings begin. Courts take a dim view of parties who try to hide or destroy assets, and doing so can result in serious consequences including an unfavorable property division.
The Importance of Full Disclosure
Both spouses have a legal obligation to fully disclose their assets during divorce proceedings, including digital assets, even those that may seem minor or that one spouse believes the other does not know about.
Attempting to hide digital assets is not only unethical but can backfire significantly. If hidden assets are discovered later, the court can reopen the divorce case and modify the property division. The spouse who hid assets may face sanctions, contempt charges, and an award to the other spouse that is far larger than what would have resulted from honest disclosure in the first place.
If you suspect your spouse is hiding digital assets, an attorney experienced in this area can help you pursue discovery and, if necessary, work with forensic specialists who can trace digital transactions and uncover hidden holdings.
About Green Legal Group
At Green Legal Group, we bring over 40 years of combined legal experience to every case we handle. Our commitment to excellence means we stay current on emerging issues like digital asset division to ensure our clients receive thorough, comprehensive representation. We are trustworthy advocates who take the time to understand your complete financial picture, including both traditional and digital assets, so nothing valuable is overlooked.
If you are facing a divorce and have questions about how your digital assets will be handled, we are here to help. Schedule a free consultation today to discuss your situation and learn how our team can protect your interests.