How Do Tennessee Courts Handle Cryptocurrency Disputes During Divorce Cases?

Divorce proceedings are often complicated, but when assets like cryptocurrency are involved, it can add a whole new layer of complexity to property division. As digital assets like cryptocurrency become more common, Tennessee courts must address how to fairly distribute these holdings and handle disputes that arise during divorce. Continue reading for more information and work with a skilled Memphis, Tennessee property division lawyer today.

Is Tennessee an Equitable Distribution State?

Yes, Tennessee is an equitable distribution state. This means that during a divorce, marital assets are divided between spouses in an equitable way based on factors unique to the relationship, including:

• The length of the marriage
• The age and health of each spouse
• The earning capacity of each spouse
• Contributions made by each spouse to the other’s education or career

Cryptocurrency can be considered a marital asset subject to property division. Assets acquired during the marriage are generally marital property, regardless of whose name is on the account or digital wallet. Crypto acquired before the marriage may be separate, but only if it was not commingled with marital funds or did not increase in value due to marital efforts.

What is Cryptocurrency and Why Does it Cause Issues in a Divorce?

Cryptocurrency, or crypto for short, is a digital asset that exists solely electronically and is recorded on a ledger known as a blockchain. It functions similarly to money but is stored in digital wallets and secured by private keys or passwords. Because it is decentralized, it is not controlled by a bank or government. Instead, transactions can occur without a third-party oversight.

While crypto does not inherently cause problems during a divorce case, its digital form can create unique challenges. Because crypto is not centralized, it can be difficult to track transactions. This means assets can be transferred quickly and without obvious paper trails, making it easier for a spouse to hide assets.

Additionally, the value of cryptocurrency can fluctuate significantly. While assets may be worth a significant amount today, the value could plummet by next week, and vice versa. Disputes often arise over which date to value and divide the crypto.

How Do TN Courts Handle Cryptocurrency Disputes During Divorce Cases?

It’s important for courts to take steps to address disputes, especially over hidden or undisclosed cryptocurrency. Both spouses will be required to participate in full financial disclosure during the discovery process, which includes digital assets. If a spouse is suspected of hiding crypto, the court can order additional discovery, such as forensic efforts to track transactions.

If a spouse lies about owning crypto or the value, it can lead to court sanctions, financial penalties, or the judge drawing negative inferences about the dishonest spouse, which can lead to an unequal division of property.

Secure the help of an experienced attorney for skilled legal advice and representation during your divorce.