From photos on your phone to cryptocurrency, divorces can involve a broad range of digital assets. If you and your spouse own digital assets (which you almost certainly do), you will need to address these assets during your divorce. But, how do you make sure you don’t overlook anything, and what are the rules that apply in Illinois?
In this article, we cover:
- How To Identify Digital Assets for Purposes of Your Divorce
- How to Value Digital Assets for Purposes of Your Divorce
- Dividing Digital Assets During the Divorce Process
How To Identify Digital Assets for Purposes of Your Divorce
The first step toward dividing digital assets in a divorce is to identify all of the assets that are on the table. Generally speaking, this covers any and all digital assets you and/or your spouse have acquired, accumulated, or created during your marriage. For example, you will need to take inventory of assets such as:
- Cryptocurrency wallets
- Domain names and websites
- Music, movie, e-book, and game libraries
- Online bank and investment accounts
- Online businesses
- Photo libraries
- Social media profiles
Your spouse will need to take inventory of these (and any other digital assets he or she may own) as well. Early in the divorce process, you will both be required to disclose your assets, and it is important to be as thorough as possible. You do not want your spouse’s divorce lawyer to accuse you of “hiding” digital assets during your divorce proceedings. On the same token, if you have reason to suspect that your spouse is hiding digital assets (i.e., if he or she has talked about investing in Bitcoin but doesn’t disclose a cryptocurrency account), you should address this with your divorce lawyer proactively, as it can be much more difficult to deal with undisclosed assets post-divorce.
When taking inventory of your digital assets, it is important to take your time and be as thorough as possible. Make a list, and include pertinent details such as login information (or where you can find your login information) and the date that each asset was purchased or created. Remember, if you owned any of your digital assets before you got married, these may qualify as “separate” property that is yours to keep in your divorce.
How to Value Digital Assets for Purposes of Your Divorce
The valuation principles that apply to digital assets are generally the same as those that apply to other financial assets and physical property. But, that doesn’t necessarily mean that the process of valuing digital assets for purposes of a divorce is straightforward. While some assets (i.e., online savings accounts) may be easy to value for divorce purposes, others can be much more challenging.
Let’s take cryptocurrency as an example. Generally speaking, since cryptocurrency can be liquidated (exchanged for U.S. currency), its present value is the value that should be used for divorce purposes. But, a cryptocurrency wallet that is worth $100,000 today could easily be worth $50,000 or $150,000 tomorrow—and its value is likely to fluctuate significantly throughout your divorce. To address this volatility, it may make sense to agree that you and your spouse will determine the value of cryptocurrency at a specific point in time. Or, you may agree to revisit the distribution of your assets if your marital cryptocurrency increases or decreases in value by more than a certain percentage during the divorce process.
Valuing domain names, social media accounts, and online businesses also requires careful consideration. Some domain names are worth no more than their registration price, while others can be worth millions of dollars. Likewise, if you only use your social media profiles for personal enjoyment, their dollar value is likely to be minimal. However, if you are a social media influencer, your profiles could have a significant monetary value. Ultimately, it will be necessary to address each of your marital digital assets individually—just as you will need to individually address the other assets that are subject to division in your divorce.
Dividing Digital Assets During the Divorce Process
Speaking of division, digital assets—like all assets—are subject to equitable distribution in Illinois. Divorcing spouses must divide their marital assets according to the principles of equity reflected in Illinois’ divorce laws, and this does not necessarily mean that a 50/50 split will be warranted.
Determining what constitutes an “equitable” split is generally one of the first steps in the process of dividing marital assets during a divorce. Once you and your spouse agree on percentages, then you can focus on dividing the assets that are on the table.
At this stage, your digital assets will be lumped together with your other marital assets, and you and your spouse will need to work toward an overall division of assets that is acceptable to both parties. Some assets (i.e., online bank accounts or cryptocurrency wallets) might get divided, while others might remain with a single spouse (i.e., your respective social media accounts). When it is possible to make copies of digital assets (i.e., family photos), both spouses can retain a copy and no division will be necessary.
While the ownership of digital assets can add to the complexity of dividing spouses’ marital property, owning digital assets does not fundamentally change the distribution process. The same basic principles apply, and divorcing spouses can use the same basic tools, techniques, and strategies to move forward. As discussed above, the key is to ensure that all of your (and your spouse’s) digital assets receive due consideration, because you don’t want to find yourself in the position of needing to deal with undisclosed assets after your divorce is final.
Schedule a Free Consultation with Gurnee, IL Divorce Lawyer Deanna J. Bowen
If you would like to know more about dividing digital assets in an Illinois divorce (or any other aspect of the divorce process), we encourage you to get in touch. Please call 847-623-4002 or contact us online to arrange a free consultation with Gurnee, IL divorce lawyer Deanna J. Bowen.
