A major part of the Pennsylvania divorce process is dividing the property you and your spouse acquired during the marriage. Although they’re not tangible like other types of property, digital assets must be addressed when spouses part ways. Due to the complex nature of these assets, they present unique considerations when it comes to dividing them in divorce. However, it’s important to understand that judges in Pennsylvania apply the same principles when it comes to dividing digital assets as they would with division of physical property.
Digital assets are defined very broadly. Anything that is stored in a digital format and has a distinct usage right can be classified as a digital asset. They can include content stored on physical devices such as computers, smartphones, and tablets — as well as on remote servers or in the cloud. Digital assets can also be those that are stored on a blockchain such as Ethereum, or other blockchain platforms.
While most people think of things like cryptocurrency and Bitcoin when it comes to digital assets, they encompass so much more. It’s essential to be aware that in today’s day and age, most families have some type of property that only exists in a digital format. For instance, social media accounts, digital photo albums, word documents, and online streaming accounts are all considered digital assets.
Other common digital assets in divorce can include:
There may be challenges associated with some types of digital assets that make dividing or transferring them in divorce particularly complicated. Placing an accurate value on certain digital assets, such as domain names can be difficult. Online photos may have sentimental value and digital assets such as cryptocurrency can rapidly fluctuate in value. In addition, a user agreement may limit your ability to transfer ownership of downloaded books, music, or movies — and subscription services cannot be duplicated easily.
Any property acquired by either spouse during the marriage is subject to division in divorce, no matter who purchased it. This is not to be confused with separate property, which was owned by either spouse before the marriage and may back to that spouse after divorce. Under Pennsylvania law, the doctrine of equitable distribution is followed when it comes to dividing marital property and debts — and the same rule goes for digital assets. Notably, “equitable” does not necessarily mean “equal,” but rather, it means that a court would determine how property should be divided in a way that is fair.
Certain digital assets, like photo libraries, may be duplicated. This makes division relatively simple. Nevertheless, in such cases, a divorce agreement should clearly identify the specific digital asset and describe the way it should be duplicated to ensure the spouse who currently has possession shares it. For subscription or streaming services that cannot be split, each spouse might be required to obtain their own account after the divorce has been finalized.
An online business would be divided in the same way as an actual company if it was formed during the course of the marriage. However, even if one of the spouses started an online business before the marriage, the other spouse may be entitled to a portion of any increase in value to which they contributed.
Like tangible physical property, dividing digital assets in divorce doesn’t always need to be decided by a judge. Spouses are free to work out an agreement outside of court to decide between themselves who will get what. This can allow them to divide the assets in any manner they choose, instead of letting a judge decide how their property will be split. In the event spouses can’t reach a settlement, a judge would determine how to achieve an equitable distribution of digital assets.
Alternatives to litigation such as mediation,, and negotiation can often be useful in helping spouses reach an agreement regarding dividing digital assets. Not only can these methods of resolving disputes save the parties to a divorce a substantial amount of money, but spouses may also be more satisfied with the outcome. Significantly, working out a settlement can allow the spouses to have more flexibility over what happens to the assets. If a spouse has an interest in retaining a specific digital asset that does not have value for the other, they might consider a buy-out arrangement or trading the asset for something else of the same value.
Dividing digital assets when a marriage ends can be stressful and overwhelming. But with a skillful divorce attorney by your side, you can help ensure your rights are protected and you achieve a fair outcome. The Kulick Law Firm offers experienced representation to clients in Northeastern Pennsylvania for a wide variety of divorce and family law matters. Call (570) 203-2756 or contact us online to schedule a consultation to learn more about how we can assist you.