My soon-to-be ex-husband did not disclose his cryptocurrency holdings to our prenup when we first married five years ago, as he claims they were of little value at the time.
They have now increased significantly in value, and he is reluctant to include them in our divorce settlement.
Am I entitled to a share of his crypto assets?
According to the Marriage Foundation, one in five weddings in the UK involve pre-ups.
Ed Magnus of this is money reply: With more and more Britons buying cryptocurrencies, and with premarital agreements now relatively common, these two trends are on a collision course that could affect many more in the future.
According to recent research by the Financial Conduct Authority, the number of people holding cryptocurrencies in the UK is estimated to be 2.3 million.
And according to a survey conducted by the Marriage Foundation in July 2021, one in five weddings in the UK are thought to involve prenups.
A prenuptial agreement sets out how the assets will be divided in the case of a future divorce.
Since he has held these assets for more than five years, it is likely that your spouse bought bitcoin – the oldest and most popular cryptocurrency.
If that’s the case, it would cost a lot more today than it was when he bought it.
An estimated 2.3 million people in the UK are believed to have cryptocurrency.
For example, if he had bought the equivalent of one bitcoin worth £295 on January 1, 2016, it would be worth £45,130 based on today’s prices – 153 times more than the bitcoin he had bought.
While it had little value at the time of purchase, it is now likely to be highly valued and therefore more relevant to your divorce proceedings.
We spoke to Harriet Arrington, family law partner at the law firm Boodle Hatfield, to provide some clarity on the matter.
Harriet Arrington replies: The rapid rise in both popularity and value of cryptocurrency means that such holdings are increasingly becoming a feature in divorce proceedings.
Not only is cryptocurrency a relatively new type of asset that is extremely difficult to trace, but the existence of a pre-marriage agreement adds further uncertainty.
In England and Wales, premarital agreements are not automatically binding and cannot be followed by the courts unless certain requirements are met.
For example, they must be signed in good time before marriage, they must be broadly fair, both parties must have independent legal advice and, importantly, both parties must dispose of all their property before signing. will be fully disclosed.
A well-crafted prenup will allow certain types of assets to be encircled, even if their value has increased significantly during the marriage.
Therefore, if your spouse disclosed their cryptocurrency holdings at the time of signing, the agreement can ensure that any increase in their value must also be safe and secure upon divorce. But here, seriously, they weren’t.
It is much less relevant that your spouse is now reluctant to include his crypto assets in the divorce settlement.
The court will take all assets, including digital assets, into account when assessing what a fair outcome will look like.
If a party is unwilling to share a particular asset, they can certainly make it clear during settlement negotiations.
For example, this can be balanced by an offer that you instead receive a different type of asset, such as cash.
However, where there is no settlement, the court has broad powers to distribute the property in such manner as it deems fit.
Depending on the circumstances, the court may decide that you are not entitled to half of the crypto holdings in any event.
Let’s consider two very different scenarios.
In the first, your husband had his own cryptocurrency before marriage. He never did anything with it, just allowed it to sit there and appreciate. You were never involved.
Our reader’s chances of holding any of her husband’s crypto assets will depend, in part, on how much she was involved in his investment and whether it met family expenses.
Here, provided that the court is satisfied that your claims (housing, maintenance and so forth) can be met using other assets, it may leave the cryptocurrency to your spouse.
In the second scenario, your husband continued to invest throughout the marriage, consult you, as well as sell crypto assets to meet family expenses.
You were both involved, even if your husband actually invested. The possibility of sharing of holdings is high here.
If you are not completely comfortable in the world of cryptocurrency it is advisable to be represented by someone who is; Even considering taking the bulk of other assets like cash or property in exchange for crypto holdings.