Digital assets are becoming more prevalent in society, especially among millennials. Accordingly, dividing them is an increasingly common issue in divorce. While property division can be contentious when any marriage ends, the distribution of digital assets may present unique challenges. Digital asset division is still an emerging issue —and there isn’t much case law yet to guide courts. However, California judges typically apply the same principles to dividing digital assets as they would with the distribution of physical property.
What Are Digital Assets?
Almost every couple owns digital assets. They can be defined as anything owned or stored in digital form. Digital assets are not tangible, but they can still be considered marital property if acquired by either spouse during the marriage. Bitcoin, books downloaded to a Kindle, movies stored on an iPad, and iTunes libraries are all examples of property that would be considered digital assets.
Digital assets can include a wide variety of intangible property, such as:
- Collections of photographs stored on a shared computer or other devices
- Online storefronts and internet businesses
- Video and music collections stored on tablets or computers
- Video games
- Online consumer rewards, gift cards, and airline miles
- Websites and domain names
- Digital artwork
- Data storage accounts
Although one might think that these types of assets cannot be divided, they actually can be. However, each type of digital asset must be evaluated — and it must be considered whether actual division or transfer of the asset is possible. In addition, many types of digital assets have sentimental value rather than monetary worth. These types of digital assets must also be divided before a divorce can be finalized.
What Happens to Digital Assets in Divorce?
When it comes to divorce, California is a community property state. This means that any property acquired during the course of the marriage is subject to a 50/50 split in divorce, including digital assets. If the spouses can reach a settlement agreement, they can divide the digital property in any way they wish. But if the case goes to trial — and a judge determines the outcome — digital assets will be divided equally, regardless of who purchased or acquired the digital asset while the spouses were married.
Depending on the type of asset, division may be as simple as making a duplicate to ensure each spouse has a copy. However, the manner in which digital assets such as photos, music, and videos should be copied must be clearly specified in the divorce agreement to ensure the spouse in possession shares it.
Online storefronts like eBay and Etsy shops are also digital assets that must be divided in divorce if they were formed during the marriage. Significantly, internet companies are divided in the same way as brick-and-mortar businesses. If the online shop existed prior to the marriage and the other spouse contributed to it, any increase in value due to the part of that spouse would be subject to division.
Additionally, many spouses share streaming media accounts such as Netflix or Hulu. These accounts can present various challenges when it comes to division. If spouses shared an account during the marriage, each might have to obtain their own pursuant to divorce.
Negotiating Division of Digital Assets in Divorce
It’s generally best for spouses to reach an agreement regarding property division among themselves, rather than allow a judge to determine the outcome at trial. If spouses are unable to do so, they might consider mediation or collaborative divorce before proceeding to litigation. Negotiating division outside of court can also save a substantial amount of money that would be spent on litigation, as well as time in court.
By working out a settlement agreement that addresses digital asset division, spouses can divide them in a way that they think is fair, instead of a court dividing the property in half. There may be some digital assets that only one spouse has an interest in retaining. For instance, if one of the spouses has a collection of video games and it does not hold interest for the other spouse, the spouses might consider a buy-out of the assets or trading for something of equal value.
Contact an Experienced Fresno Divorce Attorney
Digital assets can have both monetary and emotional value. If you are facing divorce and have acquired digital assets with your spouse during your marriage, it’s crucial to ensure your interests are protected. A knowledgeable divorce attorney will be able to advise you regarding your legal rights and can ensure they are protected. Providing compassionate counsel and reliable representation, The Law Offices of Rick D. Banks is dedicated to helping clients achieve favorable outcomes in their cases.
The Law Offices of Rick D. Banks has been assisting clients throughout Fresno and the surrounding area with their divorce and family law matters for more than 20 years. To schedule a no obligation consultation, call (559) 272-8359.