Marital property today can include a crypto wallet, a balance of airline miles, an online store, a valuable domain name, or a channel that earns ad revenue every month. California’s community property rules apply to digital assets the same way they apply to a house or a 401(k). Each kind of digital asset raises its own questions about where it is held, how to value it, what rules govern a transfer, and how long it keeps producing income.
Digital Assets Follow the Same Community Property Rules
With limited exceptions set by statute, property either spouse acquires during the marriage while living in California is community property, and unless the spouses agree otherwise, the court divides the community estate equally. The form of the asset makes no difference. Bitcoin bought with paychecks earned during the marriage is community property in the same way a brokerage account funded from those paychecks would be. A spouse’s earnings and accumulations after the date of separation belong to that spouse, and assets owned before the marriage or received by gift or inheritance are separate property.
Digital holdings can also be mixed. Crypto bought before the wedding and added to with marital income, or a business started before the marriage that grew through work during it, can carry both separate and community interests. Determining the separate and community interests may require tracing financial contributions and examining how each spouse’s work affected the asset’s value. Herning Law’s property division page covers that analysis in more detail.
Cryptocurrency: Finding It, Valuing It, and Dividing It
Crypto held on an exchange leaves account statements and transaction histories. Crypto held in a self-custody wallet, including a hardware wallet, has no institution keeping statements, but transactions on public blockchains such as Bitcoin’s are permanently recorded, and anyone can trace them from known addresses.
Tax records can provide additional evidence. Federal income tax returns require every filer to answer whether they received, sold, exchanged, or otherwise disposed of digital assets during the year, and for sales and exchanges on or after January 1, 2025, custodial crypto brokers report proceeds to the IRS on Form 1099-DA. Each spouse’s preliminary disclosures include the tax returns they filed in the past two years, so those records can surface holdings early in the case. They have limits, though. A person who only buys crypto with dollars and holds it generally answers no to the tax return question, so a return can point toward holdings without confirming that the spouse disclosed every wallet.
The valuation date carries special weight for volatile holdings. California values community property as near as practicable to the time of trial, and crypto prices can move sharply in a single week. A spouse can generally ask the court, by motion on 30 days’ notice, to value an asset on a different date between separation and trial, and the court can use that alternate date for good cause. Spouses who settle can also agree on a valuation date, or divide each holding in kind so that each receives half of every coin and both share whatever the market does next.
Equal market value can still mean unequal after-tax value. The IRS treats digital assets as property, transfers between spouses as part of a divorce are generally tax-free, and the receiving spouse takes over the original cost basis. Two holdings with the same market value today can carry very different tax bills when sold, so a fair division looks at basis as well as price. The spouse transferring an asset should also hand over records showing its cost basis and how long it has been held.
Airline Miles and Credit Card Points
Points earned during the marriage, whether through travel or card spending paid with community funds, can carry substantial economic value, and spouses can account for that value in their settlement. Moving the points themselves is a separate question governed by each program’s terms. Some programs will, at their discretion, credit points to a spouse named in a divorce judgment, sometimes for a fee, and others prohibit transfers altogether. When a direct transfer is unavailable, spouses can offset the value with other property or agree that one will book travel for the other. Points have no fixed cash value, so the settlement should state the value both spouses agreed to use.
Online Businesses and Domain Names
An e-commerce store, a software product, a paid newsletter, or an affiliate site built during the marriage is generally community property, including its goodwill. Valuing one involves the same questions as any closely held business: revenue, platform payouts, advertising costs, and how much of the income depends on one spouse’s continued effort. When a business existed before the marriage and grew through work during it, courts apportion the growth between separate and community interests, using established methods that look at whether the growth came mainly from the spouse’s effort or from the business itself.
Domain names can also be valuable. A short, memorable domain can sell for a substantial price, and a domain tied to an operating business carries part of that business’s value. Registrar rules partly govern the rights that come with a registration, and the settlement can include them in the business valuation or address them separately. A settlement should name who keeps each domain, which registrar account holds it, and how and when any transfer happens. The settlement should also address how the business will keep access to its payment processors, storefront platforms, and advertising accounts. Provider rules may restrict ownership changes or require new accounts, identity verification, or approval before control changes hands, so the settlement should allow time for those steps and keep the business running in the meantime.
Creator Income and Digital Content
A YouTube channel, podcast, Substack, or online course built during the marriage can produce income for years. In In re Marriage of Worth, a California appeals court held that books written during a marriage, and the copyrights in them, were community property, and the court described any artistic work created during the marriage as community property. Royalties attributable to creative work produced during the marriage may remain community property even when the payments arrive after separation. Income from new work performed after separation generally receives different treatment, and revisions or ongoing work on older content can blur the line. Sorting the two takes records showing when the creator made each piece of content and what each one earns.
Creator income also counts for support. Child support uses income from whatever source it comes, and the court can adjust support to account for seasonal or fluctuating income, which may mean looking at a longer period than a single month. Spousal support also weighs each spouse’s earnings and earning capacity. Herning Law’s pages on child support and spousal support explain how income feeds into each.
Disclosure Covers Every Account
Each spouse must disclose every asset in which they have or may have an interest, whatever its character. That includes wallets, exchange accounts, points balances, domains, and online businesses, and the duty continues through the final division of property. The standard restraining orders printed on the divorce summons also bar either spouse from transferring or concealing property without the other’s written consent or a court order, outside the usual course of business or the necessities of life. Those orders bind the filing spouse once that spouse files the case and the court issues the summons, and they bind the other spouse once served.
Spouses owe each other fiduciary duties, and when the court finds that a spouse breached them by failing to disclose a community asset, the remedies include an award to the other spouse of 50 percent of the asset’s value plus attorney fees and costs. A 100 percent award requires clear and convincing evidence that the breach involved fraud, oppression, or malice. For these remedies, the statute measures the asset at its highest value among specified dates, such as the date of the breach or the date of the court’s award. The court also keeps the power to divide community assets that were left out of the judgment.
Property Division When Digital Assets Are Involved
Meghan Herning represents clients in property division cases, including cases involving complex financial assets, and helps develop the evidence needed to establish ownership and value. She practices in family courts across all nine Bay Area counties and works with clients directly in English, Spanish, and Portuguese.