Dividing Digital Assets in an Alabama Divorce
In today’s increasingly digital world, divorce no longer involves the division of physical assets alone. Digital assets, ranging from cryptocurrency to monetized social media accounts, have become an integral part of marital estates in Alabama. Dividing these assets can be a complex process, which requires a deep understanding of their monetary as well as sentimental value. It is important to work with an experienced Alabama divorce lawyer to make sure your digital assets are valued and divided in a fair and equitable manner.
What Are Considered Digital Assets in Alabama?
Digital assets are intangible properties or items that exist in digital form and can be owned, used, and transferred. They can have monetary, entertainment, as well as sentimental value and can be divided between the spouses in the event of a divorce. The most common types of digital assets include:
Cryptocurrencies:
Data shows that approximately 17% of Americans own and trade cryptocurrencies like Bitcoin, Ethereum, Tether, XRP, and more. These digital currencies are typically stored in online wallets or on cryptocurrency exchanges and can have significant monetary value.
Websites and Domain Names:
Websites or blogs owned by one or both spouses, including those that generate income, can be considered digital assets. The same rule applies to domain names, which can also have substantial monetary value depending on their uniqueness or demand.
Non-Fungible Tokens (NFTs): NFTs are digital assets tied to ownership of unique content such as digital art, music, or collectibles.
Social Media Accounts:
Social media accounts like Facebook, X, Instagram, and LinkedIn can have personal as well as professional significance. For influencers or businesses, these accounts can also be a source of revenue.
Digital Products:
If one or both spouses have created digital properties like eBooks, online courses, or digital art, this can be considered a valuable marital asset. Future royalties or earnings from these works might also be subject to division.
Digital Media:
Purchases from platforms like iTunes, Amazon, or Spotify, including playlists and downloaded media, can be considered digital assets and have to be divided. Similarly, Kindle books, Audible memberships, and other subscriptions can also be considered part of the marital estate.
Why You Need an Experienced Alabama Divorce Lawyer to Identify and Evaluate Digital Assets
Digital assets, particularly in the context of divorce, introduce a host of unique challenges that can be challenging to deal with. Unlike physical assets, digital assets are often intangible, difficult to track, and subject to complex valuation processes. It is why legal assistance is so important in these cases.
Identifying Digital Assets
One of the first hurdles in dividing digital assets is identifying all the digital assets that are part of your marital estate. It can be challenging, especially if your spouse tries to hide their digital assets to avoid sharing them with you. The nature of digital property – often stored in private online accounts or in encrypted formats – makes it easy to hide them and they could go undiscovered in the absence of careful scrutiny.
A skilled Alabama divorce lawyer can use various legal tools and strategies to identify and uncover all digital assets. These include:
- Conducting Comprehensive Discovery: Your lawyer can use discovery tools like subpoenas, depositions, and requests for financial documents to uncover digital assets. Using these tools, they can get your spouse to provide all the information about their online accounts, financial statements, and transaction histories.
- Analyzing Financial Records: Your lawyer can review your spouse’s bank statements, tax returns, credit card records, and other financial documents to identify discrepancies that might point to hidden digital assets.
- Collaborating with Forensic Experts: In cases where digital assets are difficult to trace, your lawyer can work with private investigators and forensic accountants who specialize in tracing digital assets and make sure all the assets are accounted for.
Assigning Fair Value to Digital Assets
Once all the digital assets have been identified, the next step is assigning them a fair value. This process can be just as complex, due to the unique characteristics of digital property and the rapidly changing technology landscape. Here’s how your lawyer can accurately evaluate your digital assets:
- Engaging Valuation Experts: Your lawyer can collaborate with valuation professionals, such as appraisers, financial analysts, and industry experts, to assess the monetary value of digital assets. For example, domain names, social media accounts, or online businesses might require specialized appraisals based on market trends.
- Addressing Volatile Assets: For assets like cryptocurrency or NFTs, which are known to rapidly fluctuate in value, your lawyer can help determine the most appropriate valuation method, such as using the value on a specific date or averaging the value over time.
- Calculating Future Income: If you have digital assets like monetized websites, YouTube channels, or intellectual property that can generate ongoing revenue, your lawyer can work with financial experts to project future earnings. This ensures that both spouses receive a fair share of the asset’s potential value.
How Digital Assets Can Be Divided in an Alabama Divorce
In Alabama, marital assets – including digital assets – are divided according to the principle of equitable distribution. This means the court divides assets fairly, though not necessarily equally, based on various factors including the length of the marriage, each spouse’s financial contributions, the needs of both parties, and more.
Here are some of the strategies your lawyer might adopt to ensure a fair and equitable division of your digital assets:
Selling the Assets and Splitting the Proceeds
One of the simplest ways to divide a digital asset is to sell it and split the proceeds between both spouses. This method is particularly useful for assets with clear monetary value such as cryptocurrencies, domain names, and websites. This approach works best when both spouses agree on the sale and the asset has a clear and agreed-upon market value.
Splitting the Assets in Kind
For digital assets that can be divided without diminishing their value, dividing them in kind might be the best choice. This means that each spouse receives a portion of the asset. For example, a cryptocurrency wallet with 10 bitcoins could be divided, with each spouse receiving 5 bitcoins.
Offsetting with Other Assets
In cases where dividing the digital asset itself is impractical or one spouse wishes to retain full ownership, the offset method might be the best choice to ensure a fair division. In this method, one spouse retains the ownership of the digital assets in question, while the other spouse gets assets of equivalent value. For example, you can retain ownership of a monetized YouTube channel, while your spouse can get a larger share of retirement accounts or other assets.
Licensing or Royalties
For digital assets that generate ongoing income, such as intellectual property or monetized platforms, a licensing or royalty arrangement might be appropriate. In this scenario, one spouse retains ownership of the asset but agrees to share a percentage of future revenue with the other spouse. For example, a spouse who owns digital art or online courses might provide the other spouse with a share of royalties or licensing fees. Similarly, the revenue generated from a monetized blog or website could be split between both parties.
Ensure a Fair Division of Your Digital Assets with Smith Law Firm
At Smith Law Firm, we know that the division of digital assets requires a personalized approach. We can think outside the box and come up with custom-tailored strategies to ensure a fair and equitable division of all your digital property. Call us today at 334-702-1744 or use our online contact form to schedule a consultation with our experienced Alabama divorce lawyers.
