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Cryptocurrencies are here to stay so you might as well learn about them. If you’re married, it could be financially beneficial to understand any involvement your spouse, with or without you, might have with this new financial asset class.


Why should you care about cryptocurrency like Bitcoin? Because cryptocurrency can be very valuable community property and hidden from you when it’s time for you to divorce and divide your community assets.

What is cryptocurrency? Cryptocurrency is a digital cash system without a central authority. It is a decentralized system. Cryptocurrency is digital currency.

In 2018 this relatively new digital cash system known as the cryptocurrency market is expected to reach a total value of $1 trillion. According to data from, the market cap of all cryptocurrencies stood at over $700 billion on January 3rd of this year.

Bitcoin is the leader of all cryptocurrencies. It is based on a blockchain. Blockchain is considered a technology that is changing the way people transact business. Blockchain technology allows us to make transactions without any central review body.

Bitcoin currently has the top cryptocurrency market cap at $140,905,000,000. That’s more than a hundred and forty billion dollars in Bitcoin alone. At the time of this writing, the price of one Bitcoin is $8,269.48.

Roger Ver, CEO at, calls Bitcoin technology one of the most important inventions in all of human history. “For the first time ever, anyone can send or receive any amount of money with anyone else, anywhere on the planet, conveniently and without restriction,” Ver says. “It’s the dawn of a better free world.”

It’s the dawn of a better free world if you know where all the community Bitcoin and other cryptocurrency your spouse bought are. But, you know, sometimes they get lost. Other times they get hidden out of plain view, which means you don’t know about them.


There’s a lot of money out there in a lot of cryptos – at least $700 billion worth – and some of it might be yours. Cryptocurrency can be held in any number of ways. It can be held in virtual wallets and offline wallets. Your best friend can be holding the profits derived from his Lite Coin purchases in his girlfriend’s aunt’s maid’s name. Your spouse could be holding her Ethereum cryptocurrency stash overseas in a business partner’s name – a business partner you’ve never even heard of.

Bitcoin has been defined as, “A Peer-to-Peer Electronic Cash System.” It is considered a cryptocurrency because users can pseudnonymously transfer money directly to one another, peer to peer, without the use of a middleman like a bank, governmental authority, or Western Union. It’s called pseudononymously because users are assigned a string of numbers as their Bitcoin wallet address where they store their Bitcoins.

The problem in family law is that divorces become contentious and spouses sometimes don’t want to play by the rules — instead choosing to hide assets from their spouse that might otherwise be subject to equitable division in a marital settlement agreement.

Any specialist in family law you hire in divorce should routinely request discovery as to all cryptocurrencies that your spouse, and thus the community, might have an ownership interest in, whether you are aware of any being purchased during your marriage or not. If your spouse has suffered what he or she calls large gambling losses, or large amounts of money are found missing from community accounts, you’re going to want a forensic accounting to locate all suspected missing community assets.

Cryptocurrency can be traced back to a single spouse’s separate property just like any other tracing of a community property asset. It’s just that some assets are more difficult to trace than are others.

There are forensic analysts who specialize in tracking cryptocurrency and they can work to connect Bitcoin wallet addresses, for example, with the users’ actual identities. If large amounts of money are being transferred to a cryptocurrency exchange where cryptocurrencies are being purchased, this must be financially accounted for as well.

Same thing for the discovery of large cash withdrawals or transfers that were used to purchase cryptocurrency at peer-to-peer points of sale like If it can’t be determined where that cash went, and your spouse doesn’t produce evidence re what he or she was doing with that cash, you will want an accounting thereof that leads to an equitable division of the community assets that were lost to you due to your spouse’s unauthorized withdrawals that led to the dissipation of community assets.


Once you find the missing monies invested in hidden places, you have to get them out. That’s your family law specialist’s job, and that’s not always automatic. You might need passwords, usernames, and mnemonic seeds. If your spouse has played in the cryptocurrency market without you, it is possible your spouse has hidden a cache of profits derived from cryptocurrency business transactions in accounts under pseudonyms, other persons or business names, or they could have been transferred abroad.

If your divorce specialist has to go to court in an effort to retrieve hidden assets, your attorney will need to make a clear showing of how the money was transferred from a bank account or from some other community property asset to purchase the community cryptocurrency assets in dispute. When you hire a specialist in family law they can move the court for orders to exert pressure on your spouse to give up control over the hidden cryptocurrencies, and if that is not honored, the court can order an unbalanced division of community assets that will account for your share of the missing cryptocurrency.



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In another important family law court determination that affects third party’s to marital dissolutions, California’s Second Appellate District has held that a trial court did not err by ordering a third party, who was joined by the dissolution, to pay attorney’s fees of petitioner Wife without first determining whether petitioner was likely to prevail in her action.  The facts involved in the remarkable case of In re Marriage of Bendetti are as follows:

During their dissolution proceedings, Husband and Wife executed a Marital Settlement Agreement (MSA) that resulted in dividing their community property, which included their 50% interest in two restaurants, and ordered Husband to pay spousal support to Wife.  The MSA also stated that the parties’ Partner in the restaurants was willing to buy out their interest for $400,000, by paying off their existing IRS liability and paying the remainder to Husband and Wife in equal shares.

Per the agreement, Partner was supposed to sign a promissory note to Wife for her interest and pay off her share in equal installments over ten (10) years at 10% interest.  Partner was to pay Husband’s share to him in full.

Over the years, Partner failed to sign a promissory note to Wife, but paid her $1,500 every once in a while “to help her out because she had not been treated well in her divorce.”  Meanwhile, Husband failed to make regular spousal support payments.

In 2006, Wife took legal action to recover Husband’s spousal support arrearages.  During that process, she found out that Husband and his second wife (W-2) were parties to litigation over a $750,000 investment they made in another restaurant.  During Husband’s deposition in that litigation, he claimed that he and another Investor agreed to be partners in all of Investor’s California restaurants, but W-2 had signed the operating agreement for the restaurant that was involved in the current suit.

Husband also stated that Partner had paid part of what he owed to Husband from a restaurant that was involved in the current suit.  Husband further stated that Partner had paid part of what he owed to Husband from a restaurant sale by contributing to Husband’s capital contribution to the partnership with Investor.

When Wife learned of all this, she filed a judgment lien in the litigation.  The litigation settled in June of 2007, and W-2 received a $7.25 million payment, “apparently without regard to the lien.”  Within months, Husband paid $271,000 of those funds to Wife for the accrued spousal support arrearages.  Wife then filed a motion, seeking $31,693 for attorney’s fees incurred in recovering unpaid spousal support.

In response, Husband pleaded poverty.  He claimed that his only income was $950 per month from Social Security and that he had no other assets.  In his supporting declaration, Husband claimed that W-2, not he, was the investor in Investor’s restaurants, that he received nothing from the litigation settlement, and that he received no money from Investor’s restaurants.

Wife replied that Husband was the investor in Investor’s restaurants and that Husband had fraudulently transferred his settlement proceeds to W-2.  W-2 filed declaratory relief in July of 2008 from the U.S. District Court, seeking judgment that settlement proceeds belonged to her, but, acting on Wife’s motion, District Court dismissed W-2’s action.

In 2008, Wife successfully moved to have W-2 joined in the dissolution proceedings.  She then filed a complaint in joinder, alleging actual and constructive fraudulent transfers and unjust enrichment, and seeking declaratory relief.  When W-2 filed her demurrer and motion to strike, Wife amended her complaint to delete the cause of action for unjust enrichment, but still sought declaratory relief for actual and fraudulent transfers under the Uniform Fraudulent Transfer Act.

In 2010, Wife filed a motion seeking $223,090 in pendente lite attorney’s fees from Husband and W-2 for fees incurred for spousal support enforcement, defense of W-2’s federal action, and for preparation of pleadings in the current action.  She asked for an additional $100,000 for “work to be performed.”

The family law trial court in Los Angeles noted that Husband and Wife-2 claimed Wife’s suit was a sham, but found no need to deny Wife’s attorney’s fee request simply because her suit might be meritless.  The trial court concluded that Wife needed the fee award to ensure that she could sufficiently fund her suit for the trial court to hear the merits.

Accordingly, the trial court ordered Husband and W-2 to pay Wife $30,000 for fees in opposing W-2’s demurrer and motion to strike, $30,000 for omitted asset motion, $45,750 for legal services involved in W-2’s federal suit, and $26,000 for joinder, meet and confer, and other discovery requests in connection with the current action, for a total of $131,750.  The trial court declined to order fees for work not yet performed.

W-2 appealed, claiming that the family law trial court had erred by awarding fees without requiring Wife to show a reasonable likelihood of success in her suit, and the 2nd Appellate Court of California has affirmed the trial court’s decision, having found that:

1)      California Family Code §2030(d) permits the trial court to order a third party, who has been joined in a legal action, to pay another party’s attorney’s fees;

2)      That the trial court may order a third party joined in an action to pay another party’s attorney’s fees without requiring that fee recipient show a reasonable likelihood of prevailing in her claims against a third party; and,

3)      There was sufficient evidence of the dissolution issues related to W-2 (Husband’s conflicting claims re his involvement and W-2’s receipt of settlement funds) to show that W-2 was connected to the subject of the litigation.


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So you’re thinking of leaving the spouse, and you think it might be a good idea to take a cash advance from the joint family credit card, just in case.  And you want to put the money in your own bank account, sacking the community with the debt, and not telling him about it.  And you think this is a good idea.  And, well…

Maybe you should think again.  That’s because California’s appellate courts have ruled that a trial court erred by not awarding attorney fees as sanctions under Family Code §1101(g) despite the fact it found during a dissolution trial that Wife had violated her statutory fiduciary duty by taking a $24,000 cash advance on a credit card before separation and transferring the funds to her personal bank account without informing her Husband.

The facts of Marriage of Fossum (2011) 192 CA4th 336, 121 CR3d 195 were that Wife, before separating from Husband, took a $24,000 cash advance using a credit card and transferred the funds into her personal bank account without informing Husband.  After the trial for the couple’s marital dissolution, the trial court ordered Wife to reimburse Husband for half the amount charged, but found that Husband was not entitled to an award of attorney fees even though she had violated her fiduciary duty under Family Code §721.

The appellate court reversed the judgment.  Regarding attorney fees, the court of appeal held that Husband was entitled to an award of attorney fees under section 1101(g) as a result of Wife’s breach of fiduciary duty.  Family Code §1101(g) states that its remedies “shall include, but not be limited to, an award to the other spouse of 50 percent, or an amount equal to 50 percent, of any asset undisclosed or transferred in breach of the fiduciary duty plus attorney’s fees and court costs.”