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How to protect crypto holdings in a divorce

On Behalf of | Mar 5, 2024 | High-Asset Divorce |

In an Illinois divorce, items deemed part of the marital estate will be divided by the judge in an equitable fashion. This means that you might lose some or all of your crypto holdings in a final settlement. However, there are steps that you can take in an effort to keep possession of such an asset.

Include it in a prenuptial agreement

Either or both a prenuptial and a post-marital agreement can be used to override state property division laws and protect your assets before a divorce is finalized. For instance, it can be used to stipulate that your crypto holdings remain your own separate property even if state law might consider it part of the joint estate. Of course, it may be necessary to concede your right to other assets such as a house, car or retirement account in exchange for keeping your crypto holdings.

Put your crypto in a trust

Putting crypto in a trust is another effective way to retain it in a divorce as it places your holdings outside of the marital estate. Ultimately, your spouse won’t be able to lay claim to it assuming that the trust is structured properly and in good faith. Taking this step may also minimize the risk that your spouse would be entitled to any appreciation in the asset over the course of the marriage. In some cases, the appreciation is considered a joint asset even if it was acquired before you were married.

In a divorce, assets in the marital estate are distributed according to factors such as each party’s age, income and ability to work. Therefore, you could be required to give most or all of the marital estate to your spouse unless you take steps to protect your interest in crypto holdings or other property.