Colorado’s divorce law compels both spouses to fully disclose their financial records in order to accurately draft an agreement on the fair division of their marital assets and debts. If they’re unable to agree on the division, a judge will decide for them in court. But in today’s digital age, can divorcing spouses hide assets in a digital wallet?
Because digital assets like cryptocurrency are designed to prevent traceability, the answer is—yes. Today’s divorcing spouses are more likely than ever to hide assets due to the rising popularity of digital currency. This a relatively new challenge for divorce attorneys seeking fair distribution of assets for their clients.
What is a Digital Wallet?
Digital wallets are increasing in popularity. With a digital wallet app right a smartphone, the user can store all credit, debit, and gift card information as well as other payment options to make purchases. A digital wallet also stores entirely digital assets such as increasingly common digital currencies like:
Today, the number of options for nearly untraceable digital currency is growing, including those designed specifically for stealth, such as:
These forms of digital currency are the most anonymous and untraceable types of cryptocurrency due to multiple layers of security for every transaction. These currencies use a one-time token for each transaction that then encrypts the entire transaction, keeping payment information secure. Often digital wallets have multiple layers of security such as fingerprint or facial recognition so only the wallet’s owner can access accounts.
While the security and anonymity of a digital wallet make it one of the safest ways to make transactions and move money between accounts, the multiple layers of security and easily hidden transactions make a digital wallet an increasingly common way for divorcing spouses to hide assets.
How and Why Spouses Hide Assets With a Digital Wallet
Many divorcing spouses seek to hide assets to avoid the equitable distribution of marital assets required by Colorado’s divorce law. Marital assets include any assets accumulated during the marriage regardless of which spouse’s name is on the account. Many spouses feel that money in an account with only their name should be their separate asset, but the law considers spouses as a single entity during marriage. This is based on the understanding that one spouse wouldn’t be as easily able to save or invest without the help of the other, either through the other’s financial contributions to the household, or other non-economic contributions, such as keeping the home and caring for children so the other spouse can focus on their career.
Can I Prove That My Spouse Has Hidden Digital Assets?
Some spouses may use cryptocurrency to hide assets by transferring other funds into untraceable digital currency. Transactions through cryptocurrency don’t leave receipts but instead leave behind only encrypted data blocks with hidden user identities.
Today’s spouses and their divorce attorneys in Fort Collins often hire forensic accountants who track digital assets. Using subpoena power to request passwords to digital wallets, requesting tax records, and searching emails and bank records showing withdrawals of funds that “disappeared” are all ways to prove that a spouse has hidden assets.
Hiding assets during a divorce has serious legal consequences. If you suspect a spouse has substantial assets hidden in a digital wallet or if you’ve hidden assets from a spouse, it’s important to speak to a family law attorney in Fort Collins about your legal rights.