Dividing property in a divorce is challenging, especially when it involves digital assets like cryptocurrency and non-fungible tokens (NFTs). In New Jersey, digital assets in divorce must be divided equitably. Dividing digital assets can bring unique complications related to the timing of acquiring the asset, funding or maintenance, asset valuation, capital gains or losses, and the relative concealability of digital assets.
At Weiner Law Group, we understand that divorce is more than just a legal process—it is a pivotal life transition that can involve significant financial uncertainty. Our team has decades of experience, including experience with emerging issues involving cryptocurrency, NFTs, and other digital investments. We can help you pursue a fair, informed asset division.
Asset Division in Divorce
New Jersey requires equitable distribution in divorce, which means courts divide assets fairly, though not always equally. To distribute assets, the court must determine whether each is marital (community) or separate property. Spouses only have to divide marital property.
Most spouses do not rely on a court to divide property for them, which requires a trial. Typically, the law guides settlement negotiations, enabling couples to propose property division in a written separation agreement jointly.
Marital and Separate Property
Marital property includes most assets earned or acquired during marriage, regardless of who holds title. Separate property generally includes assets that either spouse acquired:
- Before they married,Â
- After they separated,
- Through inheritance, orÂ
- As a gift specifically to one spouse.
Even when an asset starts as separate property, it can become marital if the spouses intermingle it into shared accounts or treat it as shared.
Disclosure Requirements
Each spouse is legally required to disclose all their separate and marital assets and debts, including digital assets. Accurate disclosure is essential when dealing with hard-to-trace or high-volatility assets like cryptocurrency or NFTs.
Factors in Dividing Property
New Jersey courts determine what is fair when dividing marital property based on:
- The length of the marriage;
- Each spouse’s income, earning capacity, ability to improve their earning capacity, and financial needs;
- Contributions to the marriage, including homemaking and childcare;
- The standard of living during the marriage;
- Tax consequences of asset division; and
- Whether one spouse delayed their career or education for the marriage.
Misconduct by one spouse, such as concealing assets, can lead courts to award more to the other spouse.
What Is a Digital Asset?
The term digital asset includes a wide range of intangible items stored or managed electronically, such as:
- Cryptocurrencies like Bitcoin, Ethereum, or Solana;
- NFTs, which may represent artwork, collectibles, or digital rights;
- Virtual wallets and accounts used to hold crypto or NFTs;
- Tokens and smart contracts, which are self-executing digital agreements built into blockchain systems; and
- Other digital investments, like DeFi (decentralized finance) assets or blockchain-based securities.
Compared to traditional property, digital assets can shift in value quickly, exist only in online environments, and require specialized knowledge to assess.
What Special Considerations Impact Dividing Digital Assets in Divorce?
Courts treat digital assets like other property, despite their unique complexities. Cryptocurrency and NFTs do not behave like bank accounts or real estate. Their volatility, accessibility, and privacy features can all influence how courts divide them.Â
Funding and Maintenance
When a spouse uses marital funds to buy, improve, or maintain a digital asset, courts often treat the asset, or at least part of it, as marital, such as when one spouse uses joint income to:
- Trade crypto,Â
- Pay related taxes, orÂ
- Upgrade a wallet.Â
Even if the asset started as separate property, couples may convert it into marital property by intermingling it or otherwise treating it as shared.
Ease of Concealment
Courts require both spouses to fully disclose all of their separate and marital property and debt in divorce. Failing to report digital assets, even those stored in anonymous accounts, can lead to legal penalties, including the court awarding a greater share of marital property to the other spouse.
Valuation Challenges
Digital assets present unique valuation problems. Cryptocurrency prices can swing dramatically in short periods, and NFTs may have speculative or unclear market values. To estimate value, spouses often rely on forensic accountants or digital asset professionals to assign a fair market value for the items.
Frequently Asked Questions (FAQs):
Do I Have to Split Crypto in Divorce?
If cryptocurrency qualifies as marital property based on when and how a spouse acquired it, spouses must include it in the overall marital estate subject to equitable division. You may not need to split the coins, but you must account for their value. For example, if one spouse wants to keep all cryptocurrency, they typically need to agree that the other keeps property of the same approximate value in exchange.
What Happens to NFTs in a Divorce?
Courts treat NFTs as property and include them in the asset division process. When evaluating NFTs, courts consider:
- The asset’s value on a fixed date,
- Whether the NFT generates income, such as royalties, and
- Which spouse controls access to the NFT.Â
If an NFT has personal or sentimental importance to one spouse, the spouses can negotiate to account for that.
How Is Cryptocurrency Divided in Divorce?
Spouses can divide cryptocurrency in several ways, depending on the asset’s value and how easily they can transfer or liquidate it. Common strategies include:
- Direct transfers—one spouse moves crypto into the other’s digital wallet;
- Offsets—one spouse keeps the crypto while the other receives a different asset with equal value; and
- Liquidation—the spouses sell the crypto and divide the proceeds.
Spouses usually include these terms in their separation agreement.
Work with a Law Firm That Understands Digital Assets
Digital assets are rapidly changing the landscape of property division in divorce. Whether your case involves a high-value crypto portfolio or a few speculative NFTs, working with a law firm that understands the legal and financial complexities involved is essential.
At Weiner Law Group, we provide clear guidance for clients navigating divorce in the digital age. With decades of experience and a strong reputation for strategic legal solutions, our attorneys know how to value, trace, and divide digital assets according to New Jersey law.Â
Call us today at 973-403-1100 or Contact us online to schedule a confidential consultation. We are here to help.