Divorce Professionals, Your Clients May Already Be Investing in Bitcoin, So Become the Cryptocurrency Go-To
A few years ago, I started noticing a trend. More and more of my clients were mentioning that their soon-to-be ex-spouses owned Bitcoin or traded in cryptocurrencies. They wanted to know how they could find Bitcoins, how much their spouse’s crypto stash was worth, and how digital currency was treated during a divorce.
It was becoming more and more obvious each day that Bitcoin and the world of cryptocurrency wasn’t some flash-in-the-pan trend. As an investment advisor, I had been following the rise of cryptocurrency with great interest. Now I realized it was time to dive deep and develop a command of the topic so that I could better serve my clients.
What Is Cryptocurrency?
Cryptocurrency is, in the words of Investopedia, “currency that takes the form of tokens or “coins” and exists on a distributed and decentralized ledger.” In other words, digital currency is exactly what it sounds like – a form of money that is completely digital. Bitcoin is the most popular form of cryptocurrency, but there are many others, including Ethereum, Litecoin, Chainlink, and Dogecoin, to name a few.
While a Bitcoin is not a physical item that you can hold in your hand, like a quarter or dollar bill, it certainly has value. On the day of this writing, a single Bitcoin is currently worth over $38,000. Even the lesser-known cryptocurrencies aren’t anything to sneeze at. One Ether is worth over $2,700 as I write this.
More importantly, cryptocurrency is here to stay. Crypto exchanges, most notably Coinbase, have sprung up to allow people to buy, trade, and cash out their cryptocurrency. More and more companies are also getting into the cryptocurrency game. According to Coinbase, you can use Bitcoin to purchase Microsoft apps, book at hotel through Expedia, buy a car, or even book a trip to space on Virgin Galactic. It seems like only a matter of time until even major retailers will accept Bitcoin.
Why I Believe It’s Time for Divorce Professionals to Become Bitcoin Savvy
Want to hear something mind blowing? At the time of this writing, the total value of Bitcoin is nearing $1 trillion! Additionally, Yahoo! Finance found that 21.2 million adults own some form of cryptocurrency, which represents roughly 14% of the US population.
To summarize, cryptocurrency can be highly valuable, and you are going to be dealing with more and more clients who own cryptocurrency. So, it’s been surprising to me to discover how many divorce attorneys seem to have no idea how to manage cryptocurrency in a divorce. Some even seem a little afraid of it. This situation opens the door for divorce professionals who DO understand cryptocurrency to become an indispensable asset to the attorneys in their networking circles.
I get why so many attorneys don’t know quite what to make of Bitcoin and its fellow cryptocurrencies. Cryptocurrency seemed like a joke to many people only a few years ago. (in fact, Dogecoin was initially created as a joke but is now the 5th largest cryptocurrency by market cap.) But it’s no joke now. Cryptocurrency ownership is on the rise, and we owe it to our clients to understand the unique challenges that come with finding, valuing, and dividing cryptocurrency in divorce.
What can you do?
Start by putting yourself in the shoes of your clients. When I was first educating myself about cryptocurrency, I created an account on Coinbase and bought some Bitcoin shares. By actually working through the process, I developed a stronger understanding of how elements like exchanges, personal keys, and digital wallets work. I also recommend reading lots of cryptocurrency blogs and signing up for cryptocurrency-based newsletters.
Here are a few of my favorite cryptocurrency blogs, newsletters, and communities:
Become the Cryptocurrency Expert in Your Circles
As I learned more about Bitcoin and other cryptocurrencies, an interesting thing started the happen. I gained more credibility in my networking circles. Family law attorneys began calling me with cryptocurrency questions, and I even developed specialized language for them to add to their inventory documents. (Check out this new language at the end of the article.)
These lawyers and other professionals began to rely on me and refer me more often, especially to clients who owned cryptocurrencies. I helped clients find cryptocurrency, as well as value it and decide how they want to divide it as part of the divorce settlement. These are not easy issues.
Cryptocurrency ownership was originally designed to be virtually invisible, which can make it easy to hide. Fortunately, most people use exchanges, which means you can find transfers to exchanges on bank statements. Additionally, the newest tax forms also require you to disclose cryptocurrency ownership. Because the value of cryptocurrency can be rocky to say the least, valuing it at any given time can be difficult. Clients will also have to decide whether they want to cash out cryptocurrency, which can lead to fees and capital gain vulnerabilities or receive it as cryptocurrency, which may require one spouse to create their own exchange account in order to receive their share. Austin lawyer Kelly L. Burris wrote a fantastic article for Family Lawyer Magazine that goes into greater depth about these challenges.
While these issues can be difficult, they are not impossible to conquer. Divorce specialists deal with all sorts of unique assets all the time, from artwork to gold, patents, and more. We can deal with cryptocurrency, too.
More importantly, we have to. Just like we have to keep on top of other trends, like the value of social media platforms, virtual reality assets, and the rise of NFTs (non-fungible tokens). These trends are coming fast but we’ve got to keep up in order to best serve our clients.
So, don’t be afraid of our constantly changing world. Embrace it. Become an expert and you’ll be a great asset to your clients and to your referral circles.
Inventory Language
Please feel free to add this language to your inventory documents. I also strongly suggest you add wording that gives your client 100% of the value of any assets not listed.
Digital Assets (identify asset -anything that exists in digital form, ie., data in the form of binary digits, including such things as Bitcoin or other forms of cryptocurrency, e-mail addresses, social network accounts, websites, domain names, digital media such as pictures, music e-books, movies, and videos, blogs, reward points, digital storefronts, artwork, and data storage accounts)
Virtual assets (identify assets– intangibles used in virtual worlds or MMORPGS (massively multiplayer online role-playing games), virtual pets, avatars, accessories for characters, prizes, virtual real estate, and virtual currency)
Payment systems (identify assets — All PAYPAL, VENMOS, ZELLE ACCOUNTS and any other payment systems, peer-to-peer payment services and digital wallets.)
