Bitcoin: futuristic currency or way to hide assets in a divorce?

There have been a lot of advancements in the last 10 years that have not only changed the way we look at the world but how we navigate in it as well. While most of these advancements are beneficial to society, there is one innovation that has many legal experts concerned, particularly for people who are about to go through the divorce process.

We’re talking about Bitcoins. If this is your first time hearing about Bitcoins, you’re not alone. Despite increased talks about the new cryptocurrency, many people here in Massachusetts and across the nation have never heard of it. In a nutshell, Bitcoin is a digital currency that is not regulated by a centralized government or banking system.

Many people the world over are hailing Bitcoin as the currency of the future because it allows users to make anonymous transactions with a relatively minimal paper trail. Some have argued that this protects users by reducing the likelihood of fraud. But it’s these anonymous transactions that have some legal experts concerned.

As you may or may not know, it is considered unlawful to hide assets prior to or during the property division step of a divorce. Oftentimes, the act of hiding assets can be discovered by following a spouse’s financial transactions. It’s this metaphorical paper trail that gives many spouses piece of mind because they know it will lead the courts to the missing funds, allowing for a fairer distribution of assets.

But because Bitcoin transactions are done with relative anonymity, paper trails are difficult to follow, meaning a spouse may be able to hide assets prior to separation, retrieving them later once the divorce is finalized.

As you can see, this could create considerable problems for just about any divorcing couple, which is why it is often considered a good idea to monitor your assets prior to beginning the dissolution of marriage process.

Although not every person will consider hiding assets during a divorce, it never hurts to be prepared for the worst while hoping for the best. It also can’t hurt to bring up potential concerns with your attorney so that they can advise you in how the law applies to your particular situation and how best to proceed with your divorce negotiations.

Sources: Daily Finance, “Bitcoin: The New, High-Tech Way to Hide Assets in a Divorce,” Robert Pagliarini, June 16, 2014

Bitcoin, “Frequently Asked Questions,” Accessed Dec. 16, 2014