How Do You Divide Digital Property in a Divorce?

Property is a major concern in any divorce. People stay up at night, worrying about what they might lose or gain. They also have very real concerns about whether they can survive when the dissolution finalizes.

At this point, most American families have accumulated digital assets. This property ranges from music downloads to investments. In families with a high net worth, a good portion of the assets could be digital. Stocks, cryptocurrencies, NFTs, and other investments can be owned and transferred strictly through computers. Furthermore, these assets are often directly tied to digital accounts.

Regardless of how much money you have, you may have questions about how your digital assets will fare in a divorce. To answer these concerns, we will briefly discuss how property is generally divided in a divorce. Then, we will explain some challenges to dividing digital assets.

A Brief Overview of Property Division in a Divorce

Across the nation, states generally use one of two models to divide property in a divorce. In either system, only marital property is divisible. This is property that each spouse owns, usually anything that was purchased during the marriage.

The most common system is the equitable division model. This system is based on fairness. Courts determine who is entitled to what property, and they give it to them.

Only nine states use the other model, called community property. This system tries to give each spouse 50% of the marital assets. Spouses must pay one another half the value of any property they keep. If they cannot make these payments, they must trade physical property or sell off property to keep the division equal. Nevada is a community property state.

Advantages to Dividing Digital Assets in a Divorce

Personal Files

Depending on the property in question, dividing digital assets can be rather easy. For instance, it’s simple to share personal pictures or videos, and you have several options. You can copy files over to a flash drive or external hard drive. There are also many online storage options available.

Shared Accounts

These days, families share several streaming services for movies, music, and more. Luckily, it’s easier to share this content today. Many of these services allow multiple users, so there’s no need to drop anyone or create new accounts. You simply must decide who will continue to pay for the service, or you can agree to split the cost.

Difficulties in Dividing Digital Assets in Your Divorce

Rights Issues

Unfortunately, sharing files isn’t always simple. Often, content you buy digitally is coded with DRM, or digital rights management. This ties the files directly to an account or device.

Most digital gaming works this way. Only the person who purchased and downloaded the game has access to it. Therefore, if someone keeps the gaming system, they also keep all the content tied to that system.

Even if your files are not protected, like with music downloads, it is probably illegal to share them. The court is unlikely to ask one spouse to make copies for the other.

High-Net-Worth Concerns

Investors tend to spread money and ownership around, creating situations where they can make more money. Perhaps an account is in your name, but some purchases within that account technically belong to your spouse. Tracking down ownership for each transaction can be a long, laborious process.

Even when you do clear up who owns what, you still must divide that property afterward. In a community property state like Nevada, that division must be equal.

Equal property division is difficult when the value is tied to the property. Perhaps you get to keep the digital investments, but you still owe your spouse half their value. You may not have the liquid cash to simply pay them. In that case, you may need to trade some of those investments to keep values equal, or you may need to sell the assets and split the money equally.

If you’re concerned about splitting your digital assets in a divorce, our firm is here to help. We have experience in deciphering the complicated chains of ownership in a marriage dissolution. Call us at (702) 904-9898 to schedule a consultation. You can also schedule time with us online.