Handling Digital Assets in a Property Division

Handling Digital Assets in a Property Division

One area that is often overlooked during a divorce is the division of digital assets. In today’s technology-driven world, understanding how to handle digital assets during a divorce in California can be confusing. CA Certified Family Law Specialist Judy L. Burger explores what constitutes digital assets, how they are classified, and the steps you can take to ensure a fair property division.

What Are Digital Assets?

A digital asset is anything digital that has value, establishes ownership, and is discoverable.”

According to the Internal Revenue Service (IRS), “For U.S. tax purposes, digital assets are considered property, not currency. A digital asset is stored electronically and can be bought, sold, owned, transferred, or traded.”

The tax definition of a digital asset is “any digital representation of value recorded on a cryptographically secured, distributed ledger (blockchain) or similar technology.”

Digital assets encompass a broad range of online properties and items. These can include, but are not limited to:

  • Cryptocurrency: Digital currencies like Bitcoin, Ethereum, and others.
  • Social Media Accounts: Profiles on platforms such as Facebook, X (formerly Twitter), Instagram, and LinkedIn.
  • Digital Media: Photos, videos, music files, and e-books stored on devices or in cloud storage.
  • Online Accounts: Email accounts, online subscriptions, and loyalty programs that may have monetary value.
  • Intellectual Property: Any digital content created, such as blogs, eBooks, websites, or applications.

How Are Digital Assets Valued?

One of the first steps in dividing digital assets is to determine their value. Unlike traditional assets, the value of digital assets can fluctuate significantly. Here are some approaches to consider:

  • Cryptocurrency: The value of cryptocurrencies can change rapidly. It’s important to assess the value at the time of the divorce or when the asset is being divided.
  • Social Media: While social media accounts often hold no direct monetary value, they can have significant value tied to branding or followership for business owners or influencers.
  • Digital Media: Photos and videos may have sentimental value but often lack market value unless they pertain to a business or are licensed for commercial use.

CA Property Division Lawyer Judy Burger has long-term working relationships with forensic accountants and actuaries, business and corporate attorneys, and other professionals who can assist with valuing different types of digital assets.

Community Property vs. Separate Property

California is a community property state, meaning that most assets acquired during the marriage are considered community property and must be divided equally between both spouses. However, determining which assets fall under community property and which are separate can be challenging, especially with digital assets.

Community property generally includes any digital assets acquired during the marriage. For example, if a cryptocurrency investment was made using joint funds, it’s considered community property.

Separate property is any assets acquired prior to the marriage or assets received as gifts or inheritances. If a spouse had a digital asset before marriage, it typically remains their separate property.

Key Considerations for the Digital Asset Division

CA Certified Family Law Specialist recommends the following when approaching a digital asset division:

  1. Full Disclosure: Both parties must fully disclose all digital assets. Hiding digital assets can lead to legal repercussions and negatively impact future negotiations.
  2. Access to Accounts: Ensure both parties have the necessary access to important digital accounts during the division process. This may involve sharing passwords or transferring ownership.
  3. Documentation: Keep thorough records of all digital assets. Screenshots, purchase receipts, and valuations can aid in the division process.
  4. Consulting an Expert: If there’s significant value or complexity in your digital assets, Judy Burger can connect you with a professional who specializes in digital asset valuation.
  5. Seeking Legal Guidance: Judy L. Burger is a highly qualified family law attorney experienced in digital asset division who can help you:
  • Understand your rights and obligations regarding digital assets.
  • Ensure thorough and fair asset disclosure.
  • Negotiate a division that accurately reflects the value of all assets, including digital ones.

Don’t Neglect Valuable Digital Assets in a CA Property Division

In the digital age, it’s crucial to recognize that assets go beyond physical property. Handling digital assets with care and proper legal guidance can lead to a smoother property division during a divorce in California. By being informed and prepared, you can protect your interests and secure a fair outcome.

If you need assistance with navigating digital asset division in your divorce, schedule a consultation with Attorney Judy L. Burger at one of her eight offices across California.

 

Who Gets the Intellectual Property During a Divorce

Who Gets the Intellectual Property During a Divorce?

Some property is easy to split during a divorce. One spouse may get the kitchen equipment, while the other gets the books. Maybe each spouse gets a car, and so on. With some intangible property, however, the division can be less clear cut. For example, intellectual property can be a bit of a mystery, which makes it difficult to divide during a divorce. Who gets the intellectual property? That depends on several factors.

Property Division, Generally

It’s been said a million times, but that’s because it is true: California is a community property state. This means that couples generally have equal ownership of property and debt acquired during their marriage. There are some exceptions. For example, gifts and inheritance usually remain the separate property of the spouse recipient.

Types of “Intellectual Property”

By definition, intellectual property typically is a work of human intellect. In practice, intellectual property rights may attach to:
  • Patents,
  • Copyrights,
  • Industrial design rights,
  • Plant varieties,
  • Trademarks, and
  • Trade secrets.
An inventor may have exclusive rights to an invention that is patented. Someone involved in an artistic or creative field may own the copyright to their works, which also gives them exclusive rights. If the inventor or artist owns the sole right to use or benefit from their intellectual property, is it their separate property? Should it be considered community property?

Dividing Intellectual Property During a Divorce

Generally, a spouse’s effort, time, and skill are considered community assets. During a divorce, each party must disclose all assets and debts to the other party, including patents, trademarks, copyrights, and other intellectual property. As with other property, intellectual property may be divided among the spouses, regardless of who actually created it. When it comes time to divide intellectual property, however, that property’s value can be a problem. A work of art or invention may not be profitable at the time of divorce but could generate future income. Determining whether an ex-spouse receives any future profits from intellectual property is a complicated issue. In re Marriage of Worth is one important California divorce case that involved intellectual property rights. The husband, Frederick L. Worth, had written and published several trivia books during his marriage to Susan Worth. When the couple divorced, they agreed to split the book royalties evenly. However, the husband later filed a lawsuit against the makers of the board game “Trivial Pursuit” claiming they had plagiarized his books. Though their divorce was final, Susan Worth claimed one-half of any proceeds from her husband’s lawsuit. Because the books were considered community property in the divorce, “such copyrights and related tangible benefits must be considered community property.” (See 1 Nimmer on Copyright (1987) §6.13[B], p. 6-37).

Intellectual Property – Divorce or Not – Is Complicated

If you or your spouse own interest in intellectual property, talk to an experienced California divorce attorney today. Please call us at (415) 293-8314 to schedule a confidential appointment with one of our attorneys. Ms. Burger is a California Certified Family Law Specialist and founder of the Law Offices of Judy L. Burger. We assist clients in California’s Northern to Central Coast, including San Francisco, Beverly Hills, Gold River, Santa Barbara, Ventura/Oxnard, and surrounding communities.