On behalf of Kirk Montoute LLP posted in High Asset Divorce on Thursday, June 5, 2014.
The digital age has introduced fresh challenges in obtaining accurate financial disclosure between separating spouses. Take, for example, Bitcoin and other electronic currencies. These currencies can be used to pay for Internet-based services and products, but they can also be used to hide assets. This has led to considerable concern with regard to property division when married or common law spouses separate. Alberta law states that marital property is generally to be divided equally between divorcing spouses. Common law spouses can claim up to 50% of assets acquired during the relationship upon proof of contribution or “joint family venture”. If one spouse conceals assets, the result is unfair – even fraudulent. For high-asset couples, this could result in substantial inequality.
Certain jurisdictions outside of Canada are looking at electronic currencies but it does not appear this issue has reached the family courts. In the meantime, hiding assets by exchanging actual money for Bitcoins has been added to the list of strategies used to conceal assets. Some unscrupulous spouses may attempt to hide Bitcoins by transferring the electronic currency overseas or to friends’ wallets. Though the courts and lawyers can track electronic funds in most instances, this can be time consuming, expensive and often requires the involvment of a third party expert. If proof of this activity is shown, the courts in Alberta may order a lopsided division of property located within the local jurisdiction when calculating an equalization payment.
Source: CNBC, “Bitcoin could be used to hide assets in divorces, warn lawyers,” Jane Croft, June 3, 2014
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