Divorce in the Digital Age: Virtual Assets and Online Lives

Regardless of the circumstances, divorce isn’t simple or easy. And, in the modern world, digital assets add another level of complication. Modern divorce can now involve things like cryptocurrency, social media accounts, NFTs, online businesses, and even frequent flyer miles. This is in contrast to the past, when property division mostly involved dealing with homes, cars, and bank accounts.

At Graham Law & Associates, we recognize how difficult and confusing property division during a divorce can be. Today, we’ll go over what to anticipate and how to safeguard your best interests if you’re going through a divorce in Louisiana and are curious about how your assets and digital life are treated under Louisiana law.

What are digital assets?

We’ll start with the basics. Digital assets are:

• “…any digital item with value, ownership, and discoverability.
• Blockchain technology and cryptocurrencies have expanded the definition of digital assets.
• Digital assets now include traditional items like photos and documents, as well as blockchain-based items like NFTs and cryptocurrencies.”

The following are some examples of digital assets:

• Cryptocurrencies, like Ethereum or Bitcoin, and digital wallets like Venmo or PayPal
• Non-fungible tokens, or NFTs
• Online businesses, like Etsy stores or e-commerce
• Social media accounts, like Instagram, YouTube, or TikTok
• Online bank or investment accounts
• Loyalty rewards, like hotel points, airline miles, etc.
• Stored digital media, like images, eBooks, videos, or digital artwork

Although many of these assets might not seem as tangible as a home or car, it’s important to keep in mind that they can have significant emotional and monetary value.

Why do digital assets matter in a divorce?

In a divorce, Louisiana follows community property laws. This implies that the majority of assets (and debts) accumulated during a marriage are typically regarded as jointly owned and are subject to an equal division. Whether you are aware of them or not, digital assets are included in this.

For instance, even though only one spouse actively managed the assets, both parties might be entitled to a portion if one created a successful Etsy store or made an early Bitcoin investment.

Before you can determine how to divide your digital assets, you’ll need to take key steps to identify and value them.

Step 1: Identify your digital assets

The first and biggest challenge is often simply finding the digital assets. Digital assets are easy to hide (sometimes intentionally), unlike traditional property. This is why full disclosure from both parties is so important. Here’s how we typically uncover digital assets:

• In contested divorces, our lawyers can formally request documentation or conduct depositions during the discovery process.
• In high-conflict or high-net-worth cases, a digital forensic expert may be necessary to track down hidden wallets or trace blockchain transactions.
• Financial statements and tax returns may show deposits or earnings from online platforms.
• Email accounts, app subscriptions, or website activity can also point to hidden assets.

If you think your spouse is hiding digital wealth and assets, tell your attorney immediately. The earlier you begin your search, the better.

Step 2: Value the digital assets

Once the digital assets are identified, your next step is figuring out what they might be worth. This part can be complicated. Cryptocurrency is a good example of this. Its value changes constantly, sometimes by the minute. The court will usually assign a value based on the fair market price at the time of the trial, but the exact date can vary by case. We can provide more information on this.

Online businesses can also pose challenges. Take into consideration things like the business’s:

• Monthly revenue
• Profit margins
• Customer base
• Intellectual property (IP), like logos or brand names
• Market trends
• Goodwill, meaning market reputation and potential growth

At Graham Law & Associates, our attorneys may bring in a business valuation expert to assess the fair value of the business. This is especially important if the business provides a primary income for either spouse.

Social media accounts may also be regarded as digital property if they are made profitable. For instance, a YouTube channel, TikTok account, or Instagram influencer page that generates revenue for your spouse could be considered a marital asset. Even if it is in their name, it may be divided, especially if it generates income or was created during the marriage. However, under La. R.S. 9:2801.2, any portion of the business’s value attributable to a spouse’s personal quality won’t be included in the valuation of a business.

Step 3: Divide the digital assets

Digital assets are typically divided equally, unless a court or a valid agreement provides otherwise. The type of asset determines how it is done.

Consider cryptocurrency as an example. One spouse purchasing the other’s share, selling the cryptocurrency and dividing the proceeds, or dividing the cryptocurrency itself so that each spouse receives half of the coins are some of your options.

Online businesses are more complicated. If both spouses are involved in running the business, you might negotiate a buyout or co-ownership arrangement. In some cases, spouses will sell the business and divide the profit. We understand, though, that co-owning a business with an ex-spouse is not always practical. You’ll need to think long-term and talk to our lawyers about your goals for the future.

If a social media account has value, it may be transferred to one spouse with a compensating asset given in return, like a vehicle or more of the retirement account. Sometimes, the revenue from these accounts can continue to be split, post-divorce, for a set period.

Digital files, like family photos, videos, and cloud-stored memories, can often be divided by duplicating the content. Although they may not have much financial value, they can be very emotionally important assets.

What are some common issues in digital asset divorce cases?

Because digital assets can be so easy to conceal, one spouse may try to move cryptocurrency into secret wallets, delete online business records, or transfer ownership of domains or NFTs. This can lead to serious consequences, including contempt of court or financial penalties. Louisiana courts take asset hiding seriously.

Another major issue can arise when one spouse controls all the passwords. If you don’t have access to joint online accounts or wallets, you could be locked out of your own marital property. Make a list of all accounts, apps, email addresses, and digital platforms. Store your passwords safely, and make copies of important data. Our attorneys can help you gain access during the discovery process if your spouse will not cooperate.

One more important thing: you may feel tempted to snoop through your spouse’s phone or email to find evidence of hidden assets or affairs. However, be careful. In Louisiana, accessing someone’s private accounts without permission can backfire on you. You might violate privacy laws or see the information thrown out in court. Instead, let our divorce attorneys guide you through the legal steps of requesting or uncovering digital evidence.

How can I protect myself before and during a divorce?

If you are heading into a divorce and have digital assets, or suspect that your spouse does, take the following steps to protect yourself.

• Make a digital asset inventory. List all the online accounts, investments, or digital businesses you can think of.
• Change all your passwords, especially those for your personal email, financial accounts, and cloud storage.
• Download and back up all your important files. Remember, things like photos, tax documents, and business records can quickly disappear.
• Talk to the family law attorneys at Graham Law & Associates. We are experienced in digital asset cases. You should also consider working with a financial advisor or tech expert. Our lawyers can help connect you to the right people.

How do I protect myself after my divorce?

Once your divorce is finalized, it’s time to completely separate your online lives. Take the following into consideration:

• Update your social media profile. Consider switching your relationship status, usernames, or business branding if necessary.
• Close all your joint accounts. Shut down any platforms you no longer need.
• Resecure your data. Make sure your ex-spouse no longer has access to your personal accounts, cloud storage, or financial platforms.

Remember, divorce is the end of a chapter, but it’s also the beginning of a new one. Taking control of your digital identity can help you move forward in your life with confidence and clarity.

Here at Graham Law & Associates, we recognize that the legal system must continually adapt to keep pace with the evolving digital world. We understand that it’s essential to treat your digital assets with the same care and consideration as physical property. We’ll help you safeguard your assets, whether those assets are a successful YouTube channel, a cryptocurrency wallet, or an online store that you created from the ground up. We make sure every digital asset is tracked down and treated equitably, collaborating with forensic investigators, financial professionals, and business valuation experts. If you’re thinking about getting a divorce in Louisiana and you or your spouse have digital assets, call our offices or fill out our contact form to schedule a free consultation. We’re here to guide you through the process, one step at a time.