Cryptocurrency in Marriage: How a Prenuptial Agreement Can Protect Your Digital Assets

Divorce rates have hovered around 50% in the U.S. for decades. This makes taking steps to protect your assets and income a highly practical decision. 

However, it’s not easy to predict how each partner’s net worth will evolve over the course of a relationship; there are so many potential sources of income, including the Wild West of cryptocurrency. That’s why entering a marriage with a prenuptial agreement can give both spouses an increased sense of trust and security. And thankfully, with the rise of two-income households, today’s newlyweds are bucking the stigma surrounding prenuptial agreements. 

With that in mind, here’s what a prenuptial agreement (or prenup) is and how it guards against lopsided divorce settlements.

What are prenuptial agreements?

A prenuptial agreement is a joint contract between a couple who are engaged to be married. It establishes a precedent for how finances and other assets will be split if the marriage ends in divorce. 

Items covered in a prenup include:

• Pre- and post-marriage assets
• Spousal support
• Liabilities and debts
• Rights to estates or other properties
• Ownership of a business
• Cryptocurrency and other alternative assets or investments

Married couples share a lot of responsibilities, especially if they have children. Traditionally, this expectation of shared responsibilities is the basis for distributing assets after a divorce. 

But for some couples, the standard way of distributing assets may seem unfair or just unnecessary. These couples may instead choose to predetermine the outcome of a potential divorce by signing a prenup. 

A prenuptial agreement offers a transparent and liberating alternative to contested divorce proceedings. Whether the marriage lasts ever after or a few years, both spouses are assured that they will retain their most valued assets.

Are digital assets at risk in a divorce?

Legislation surrounding cryptocurrency and marriage is very new. And given the financial potential of digital assets, it’s important to account for their value in the event of a divorce. Just like any other asset, a spouse’s digital wallet will be assessed and distributed — unless it is protected by a prenuptial or postnuptial agreement.

Some partners may not be comfortable managing cryptocurrency. Given this asset’s volatility, it could be wise to exclude ownership of digital currency in a prenup to avoid sharing a significant financial loss.

Although New York applies equitable distribution principles instead of the outdated 50/50 split, a prenuptial agreement is the simplest way to designate ownership of all (or some) digital currency.

How Equitable Distribution Works in New York

What happens if you don’t have a prenuptial agreement? In New York, divorce settlements are decided via equitable distribution. This system gives the court flexibility to consider all aspects of the marriage to determine a fair dispersal of assets.

Factors the court will examine include:

• Individual assets like investments, retirement accounts, or jewelry
• Specific requests made by each party
• Spousal support or maintenance
• The health and age of each spouse
• Nonfinancial contributions made by each party
• The duration of the marriage
• The current living situation of each spouse
• Each spouse’s potential for earning income
• Actions by either spouse that compromised the marriage

Equitable distribution is adopted by 41 states and is designed to recognize each marriage’s unique circumstances. That said, working with a prenuptial agreement attorney can save divorcing spouses the time, hassle, and expense of lengthy divorce litigation.

Protecting Assets With a Prenuptial Agreement Attorney

Cryptocurrency and marriage don’t have to be a complicated pairing. A prenup can ensure both romantic partners are entering the marriage for the right reasons. 

If you live in Garden City, NY, and would like to learn more about prenups or want to discuss your options, schedule a consultation with Aiello & DiFalco.