Trying to hide assets during a Massachusetts divorce is as old as divorce itself, and technology has started to bring concealing wealth into the modern era.
Bitcoins are now the latest innovative method for potentially stashing away money so that it cannot be found when it comes to dividing the marital estate. Due to the touted anonymity of Bitcoins, it seems practical and logical that someone could try to illegally withhold wealth by filtering money into this secretive digital currency.
This high-tech method of burying a sack of cash in the woods doesn’t come without the risk of serious consequences; however, and it is obviously not recommended to attempt to hide assets during a Massachusetts divorce due to the potential serious harm to your case when you are caught.
But you need to be aware this option exists, particularly if you believe your spouse may attempt to be dishonest in their disclosure of assets.
What are Bitcoins?
Bitcoin is a worldwide digital currency developed back in 2009, which has seen a rise to almost mainstream popularity over the past year or so. The Bitcoin exchange is completely decentralized, meaning there are no attachments to banks or governments.
There is also no physical currency. Bitcoins are stored in virtual wallets on your computer, smartphone or virtual cloud and all transactions take place over the Internet. There is no need to give names when dealing in Bitcoins; all that is required are the individual’s wallet IDs. It is also much easier to transfer Bitcoins out of the country, making them even harder to track down.
This anonymity, the lack of paper trail that would typically be found through conventional transactions and the current lack of regulation are why divorce attorneys have concerns that Bitcoins could be a new avenue for a divorcing spouse to hide money from the court.
Traditional methods for discovering hidden assets
At the beginning of the divorce process, both spouses are required to submit a financial affidavit that should encompass all of their assets, incomes and liabilities.
However, if you believe your spouse is not being 100 percent truthful in their declaration, your attorney will start the process of verifying whether there are financial aspects that have not been fully disclosed.
This process involves sending out interrogatories, subpoenas, depositions, combing through tax returns and bank statements, looking for hidden accounts or lines of credit, etc.
Bitcoins and Massachusetts divorce
The wording of what must be included in a financial affidavit will vary by state, but it typically includes full disclosure of stocks, bonds, vehicles, retirement accounts, bank accounts and “other assets” (which would encompass Bitcoins).
However, the anonymous nature of Bitcoin and the slow rate at which laws and regulations catch up with modern technology leaves plenty of room for loopholes. Knowing the possibility exists for money to be hidden in Bitcoins may help you keep a sharper eye out for clues that can lead to discovery.
Obviously, liquid money would need to be converted into Bitcoins at some point, which would leave behind an initial fingerprint. However, it becomes much blurrier after that, as the Bitcoins can be anonymously transferred out of your spouse’s control and the court’s jurisdiction.
It is always recommended for both parties to be open and honest with their financial disclosures because it makes for a far cheaper and less contentious divorce, and it speeds the process along. Additionally, if a spouse is caught not fully disclosing assets, they will likely receive a far less balanced portion of the marital pot.
Overall, it generally is not worth the risk to chance it; yet, people try to hide assets from the courts when going through divorce every day. It is up to you to be vigilant for the signs that your spouse isn’t being fully honest, and with the introduction of Bitcoins and other cryptocurrencies now in the mix, you must be even more attentive to what your spouse is doing with assets that may also belong to you.
Should you be in the midst of a divorce or contemplating divorce, contact the Law Offices of Renee Lazar at 978-844-4095 to schedule a FREE one hour no obligation consultation.