Tag: special equity

Divorce and Cryptocurrency: A Bit of Bitcoin

Divorces are increasingly dealing with a new kind of asset: Cryptocurrencies. They are volatile and can be difficult to trace. What is a cryptocurrency, why are they so popular, and how are they a part of a property division in divorce?

Bitcoin is a type of cryptocurrency, and they are the latest way to potentially stash money so it can’t be found when it comes to dividing the marital estate.

Due to the supposed anonymity of Bitcoins, it seems practical and logical that people try to hide their cryptocurrencies from their spouses.

Cryptocurrencies are growing in ever larger value, and they are popping up more in divorces as a new class of asset to divide.

The law is familiar with the redistribution of many types of assets, like cash, bank accounts and other investments, but cryptocurrencies may be charting new ground.

Cryptocurrency

Cryptocurrencies are digital currencies not associated with a central government. Bitcoin, the biggest and most well-known, was developed back in 2009.

They are created and controlled by computer programs, or algorithms. Those algorithms lay out how transactions are made and recorded, and how new coins or tokens are found and released.

People and organizations known as “miners” keep records of every transaction, and attempt to solve complex computer problems that, when solved, reward them with new coins.

In effect, users record transactions directly between peers, rather than through banks or other intermediaries. That system is known as a blockchain and the transactions, and even the currencies, are sometimes referred to as “peer-to-peer.”

A major difference between a cryptocurrency and the U.S. Dollar is that, unlike the U.S. Dollar, the total amount that can ever be in circulation is limited. Because the total supply of the currency is restricted, you do not use more coins to pay for goods and services, but less.

Florida Property Division

I’ve written about property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their non-marital assets and debts, and then distribute the marital assets and debts between the parties. In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

In Florida, if there is a justification for an unequal distribution, the court can do so, but must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within two years prior to the filing of the petition.

A major fight which can take place during mediation is whether a spouse is responsible for the 50 percent drop in value of a cryptocurrency.

Bitcoin Mania

One of the main problems with a cryptocurrency is their high volatility. It is hard to equitably distribute volatile assets which can gain or lose so much value so quickly.

The price of Bitcoin, for instance, the world’s biggest and best-known cryptocurrency, almost halved in value from its peak value in December.

Cryptocurrencies will be a significant feature in a large number of divorces. Although they can be traceable, cryptocurrencies are highly volatile, and they are not going to go away.

The Business Insider article is here.

 

Unequal Property Division

A Husband recently demanded an unequal property division in his divorce. He wanted more than half of a $225 million fortune, and for his Ex to get about $6 million. He claimed he was entitled to more than half because of his “genius”. Are you entitled to more than half in a divorce?

Valuing Genius

Randy Work, 49, a former executive at Texas-based private equity firm Lone Star, had first claimed that his wife of 20 years, Mandy Gray, was entitled to only $6m because she had an affair with the couple’s personal physiotherapist.

The pair, who are both American and have two teenage children, met in 1992 and married in 1995. They split up in 2013 when Gray began an affair with the couple’s physiotherapist, 44, who she now lives with in a rented flat in Kensington.

A British high court judge rejected the Husband’s claim that he made an “exceptional contribution” to the marriage and was therefore entitled to more than a 50-50 split of the couple’s assets, which include a mansion in West London, complete with swimming pool and fitness center and a ski lodge in Aspen.

Ruling on their divorce in 2015 Justice Holman told the businessman that his wealth contribution – which Work said totaled more than $300m in 10 years – was not “wholly exceptional” and rejected his claim to be a financial “genius”.

“I personally find that a difficult, and perhaps unhelpful, word in this context,” Holman said. “To my mind, the word ‘genius’ tends to be overused and is properly reserved for Leonardo da Vinci, Mozart, Einstein and others like them.”

Work, who has spent at least $3m fighting to keep his wife from collecting half of the family fortune, took the case to the court of appeal which on Tuesday unanimously rejected his appeal against the trial judge’s ruling.

Florida Property Division

I’ve written about property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties. In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

However, if there is a justification for an unequal distribution, as in the Work divorce, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

The English Divorce

During the divorce hearing Holman had said the case “should be so easy” to settle as there was “plenty of money to go round” and criticized the couple for descending into “unedifying and destructive pugilism”.

“In our view the husband has failed to demonstrate that Holman J’s decision was wrong,” three court of appeal judges said.

London has become known as the divorce capital of the world because British judges tend not to discriminate between breadwinner and homemaker and order equal splits of combined fortunes.

However, Work had hoped to convince the court of appeal judges to allow him to join those few men who had been granted more than half of the combined assets in a divorce in recognition of the “wholly exceptional nature” of their success.

Holman had ruled that although Work was an “astute businessman”, Gray was a “highly intelligent” woman who had given up her career to follow her husband to Tokyo, where he made hundreds of millions of pounds exploiting the Japanese financial crisis.

“A successful claim to a special contribution requires some exceptional and individual quality in the spouse concerned. Being in the right place at the right time or benefiting from a period of boom is not enough,” Holman said.

“It may one day fall for consideration whether a very highly paid footballer, who is very good at his job but may be no more skillful than past greats, such as Stanley Matthews or Bobby Charlton, makes a special contribution or is merely the lucky beneficiary of the colossal payments now made possible by the sale of television rights.”

Holman said Work and Gray, 47, had been “two strong and equal partners” and he would not have been able to amass his vast fortune without her contribution.

The Guardian article is available here.