How Digital Assets Can Complicate a Wisconsin Divorce

 Posted on January 15, 2025 in Property Division

Several years ago, the term "digital assets" referred largely to photographs stored digitally on a computer. The term has an entirely different meaning today after the explosion in cryptocurrencies such as Ethereum and Bitcoin, as well as nonfungible tokens (NFTs). As of 2024, it is estimated that 6.8 percent of the global population has invested in cryptocurrency.

Although many people have at least a marginal understanding of cryptocurrencies, NFTs are a bit more difficult to explain. Tokens are unique and associated with specific, verifiable pieces of data. They cannot be divided, duplicated, or destroyed, although they can be lost. At their core, a digital key file is purchased that is associated with a piece of artwork, music, or property title.

Regardless of how deep your understanding of these digital assets is, if they exist in your marriage, they are part of the division of marital assets that occurs during a divorce. It is important that your Oconomowoc, WI family law attorney has a good understanding of digital assets so that you can ensure a fair division.

How Does the Division of Marital Assets Work in Wisconsin?

Wisconsin, like a handful of other states, is a community property state. Under community property laws, each spouse has a 50 percent ownership interest in all property acquired during marriage due to the efforts of either or both spouses. This can include wages, deferred employment benefits, retirement benefits, life insurance, income from property, and certain appreciation of property.  Separate property is anything owned prior to the marriage by one spouse or a gift or inheritance given specifically to one spouse before or during the marriage.

What Other Digital Assets Are Subject to Division Besides NFTs and Cryptocurrencies?

Digital media like photos, videos, and musical libraries can be challenging to divide. Usually, one spouse has the bulk of photos and videos on his or her computer or phone. These may need to be copied and shared as it can be virtually impossible to "divide" them.

If one person has a music account like Spotify, this can also be difficult to split. For some, there will be an agreement to continue sharing the account, although this is usually only for spouses who still get along well. Others may have to agree on a "value," letting one spouse keep the account and compensating the other with another marital asset.

Today, most spouses also share streaming accounts and may share email accounts as well as Facebook, Twitter, and Instagram accounts. If spouses use the same login credentials for a shared account, these may be divided with the spouse awarded the account changing his or her login credentials to reflect new "ownership."

Dividing Cryptocurrencies and NFTs

One problem with digital currency is that one spouse may be entirely unaware it exists. This can make it complicated to find and value during the divorce process – assuming the spouse does become aware of it. A forensic accountant is often crucial to this process. Apps like Binance or Coinbase are often used to trade cryptocurrency.

Once purchased, the cryptocurrency resides in a digital password-protected wallet. Income from cryptocurrency is taxable, so checking tax returns may give an idea of how much is involved. Since the value of cryptocurrency can fluctuate wildly, it can be challenging to determine its worth. Some spouses may choose to skip valuation and simply split the cryptocurrency equally after the other spouse opens his or her own digital wallet.

Contact a Waukesha County, WI Division of Marital Assets Lawyer

While the law has yet to catch up with digital assets, Wisconsin Statute Section 767.127(1) requires both parties in a divorce to furnish full disclosure of all assets, including financial interests in cryptocurrency and NFTs. When you have a knowledgeable Waukesha, WI division of marital assets attorney from Bucher, Wolff & Sonderhouse, LLP, you can rest easy, knowing your marital assets will be divided equally, as the law requires. Call 262-232-6699 to schedule your free consultation.