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Digital assets are now recognised as property: What does this mean for your divorce agreement?

The formal recognition of digital assets as personal property will bring a change in UK law and could affect your divorce settlement agreements.

Following Royal Assent of the Property (Digital Assets etc) Act, items such as cryptocurrency, Non-Fungible Tokens (NFTs), digital artwork, websites and other token-based digital assets will now be treated in the same way as traditional property.

When digital assets form part of your estate, it is crucial to understand how to prepare and protect them when a relationship breaks down.

How does the new Act include digital assets?

For the first time, legislation has made way for a third category of personal property, after recommendations made by the Law Commission in 2023.

Previously, the law recognised only two categories of personal property:

Things in possession – tangible assets

Things in action – assets enforceable through legal action

Digital assets did not fit into either category and caused difficulties in divorce, probate and estate planning.

This new Act formally acknowledges digital assets as property and allows them to be valued and divided more consistently within legal proceedings.

How are digital assets treated in divorce?

In England and Wales, the courts treat all property owned by either spouse as part of the matrimonial pot, unless it is specifically excluded.

As digital assets are now officially recognised, they will be treated like other investments, such as shares or cash in the bank.

However, digital assets introduce different challenges, including:

Valuation difficulties – Cryptocurrency and NFTs can frequently change in value and courts often require expert valuation or forensic accounting to determine current worth.

Tracing and disclosure issues – Crypto assets can be harder to locate, particularly if one spouse is reluctant to disclose holdings. Bank statements and exchange records may be needed to determine whether undisclosed assets exist.

Ownership concerns – Assets acquired before marriage or received as gifts and inherited may fall outside of the matrimonial pot. This does not apply if they were combined with marital finances or increased in value during the marriage.

Division issues – Splitting digital assets can be complicated and selling assets may increase Capital Gains Tax liabilities.

How to prepare if digital assets are part of your finances?

If digital assets are an important part of your estate or contribute to any of your finances, it is important to keep clear and accurate records of any activity.

This can include wallet addresses, transaction dates and the value of any investments made.

Clear documentation will make it easier to prove ownership and can also allow a fair valuation during divorce proceedings.

When dealing with digital assets, it is important to obtain professional valuations, as the value of cryptocurrencies and NFTs can change quickly and may require expert input to ensure accuracy.

During divorce settlements, you should always be fully transparent about your digital holdings, as failing to disclose assets may lead to penalties or court sanctions.

If you hold significant digital wealth, you may want to consider a prenuptial or postnuptial agreement that clearly sets out how these assets would be treated if the relationship ends.

With professional advice and early preparation, you can help protect your finances and reduce potential negotiation disputes if a divorce occurs.

How we can support you in divorce proceedings

Digital assets are no longer a legal grey area and their recognition gives couples clearer rules in divorce proceedings.

Our expert team can advise you on how your digital assets will be treated within financial settlements and guide you through the disclosure process to maintain compliance.

If you are planning ahead, we can help draft a prenuptial or postnuptial agreement to protect your digital wealth and help both parties come to a clear agreement.

If you need advice on how your digital assets are protected and divided in divorce proceedings, our Family Law experts can offer advice on a practical approach that works for you.

Stuart Daniel

Director – Head of Family Department

I qualified as a Solicitor in 2006 and now specialise in divorce, financial settlements, childcare arrangements and Pre Nuptial Agreements. I have many years’ experience as a private family lawyer having worked with two other local firms before returning to Mander Hadley, where I first undertook work experience during my university studies.