In an era of technological evolution, the emphasis on our duty to make a full financial disclosure in financial proceedings is even more important.
There is a requirement for both parties to disclose all assets even those unusual items such as paintings, or unique artwork and in this digital age, we also have to consider assets such as Bitcoins.
What are Bitcoins?
Bitcoins are a digital currency known as a cryptocurrency and are held electronically in a decentralised system meaning no one and no government controls it. The investment in Bitcoin is ever increasing and it is likely that they will become a far more common asset in divorce proceedings.
How are Bitcoins treated?
Bitcoins will be treated like any other asset in proceedings. In most cases where the parties have been in a long marriage, the Courts of England and Wales adopt the ‘sharing principle’ and will share the assets which have accrued throughout the length of marriage however, this is only a starting point and can be departed from depending on a number of factors. Therefore, in theory, the Court will have to consider the value of Bitcoin and account for its value when trying to assess the appropriate financial settlement. However, as Bitcoins are a relatively new financial instrument, there is no clear guidance from the courts on this.
Effects of non-disclosure
There is an ongoing duty to disclose details of your assets in a divorce but unfortunately there are some parties who make a concerted effort to try and hide their assets so they are not able to be taken into consideration.
The nature of Bitcoin means that users can transfer money directly from one person to another without a bank or government authority and as a result Bitcoin has been viewed as an asset with potential to be hidden in divorce proceedings.
If a divorce settlement concludes only for it to later emerge that an asset or assets that should have been disclosed weren’t and as a result, one party is disadvantaged then they could ask the court to set aside the original order. Or if for example, it is late in the proceedings that the asset emerges the court may order that party to pay the costs that have been wasted due to non-disclosure.
Attempting to hide assets of any kind will result in that party being in contempt of court and every effort will be made to ensure the parties are truthful about their assets. However, in this digital age it is likely we will see a greater variety of unusual assets which will require a specific skill to track down.
Divorce proceedings are complicated. At Wolferstans, we have a specialist family law team who can guide you through the process and ensure that you receive a fair financial settlement. If you think we can assist you, call Leah Dawkins on 01752 292288 or James Ronnie on 01752 292313.