Cryptocurrency’s Influence on NJ Child Support Requirements

Cryptocurrency is a type of digital or virtual money that uses cryptography for security. Very unlike standard currencies that are currently being used and issued by governments, cryptocurrencies operate on decentralized networks. Networks that are often based on blockchain technology. What is Blockchain? In essence, Blockchain is a secure way of recording transactions across many computers, ensuring transparency and security.

There are many types of cryptocurrencies, each with their own distinct features. The most well-known and widely used cryptocurrencies are Bitcoin and Ethereum. The first, launched way back in 2009, Bitcoin still remains the most popular and valuable cryptocurrency. It operates on a decentralized network and is typically used for transactions or as a store of value. Ethereum, created in 2015, is yet another well-known and highly used cryptocurrency. However, it is distinct due to its ability to support “smart contracts” —  these are self-executing contracts that have the terms directly written into code. Moreover, Ethereum’s blockchain also supports decentralized applications. Other cryptocurrencies include Litecoin, Ripple, Cardano, and Polkadot.

Cryptocurrency can generate income in numerous ways, including capital gains or simply increasing in value, staking rewards, mining, and selling goods or services for cryptocurrency, which can then be converted to traditional currency or used as is. Since these non-traditional assets have earning-potential, many parents in New Jersey wonder if and how crypto holdings and other digital forms of income can play a role in child support calculations.

NJ Child Support Payment Fundamentals

In New Jersey, child support is determined based on several factors that assess a parent’s ability to contribute financially to their child’s upbringing. Courts consider each parent’s salary and wages, additional income beyond base salary, investments, and other passive income such as stocks, bonds, or other investments. New Jersey follows guidelines to calculate child support based on the combined income of both parents, the number of children, and other factors like healthcare costs, special needs, or parenting time. It’s important to note that cryptocurrency income can be considered part of the combined income for child support calculations.

Child Support Laws Meet Digital Currency

Cryptocurrency may be treated as a source of income, the same as any other asset that generates profits. This means that it is not exempt from being factored into child support or spousal support determinations. Cryptocurrency can generate income in multiple ways. If an individual profits from buying and selling cryptocurrency, this increase in wealth may be considered part of their income, just like gains from other investments. Cryptocurrency mining can also generate significant income depending on the scale of operations. If a person is actively mining cryptocurrencies, the resulting income is subject to being factored into child support obligations. Should a parent receive part of their salary or wages in cryptocurrency, it is considered income and will be included in the support calculation.

Cryptocurrency Valuation, Volatility, and Challenges Posed for Child Support

The most significant challenge in cryptocurrency is the volatility and determining their own value. Many cryptocurrencies can have their value change wildly over short time frames. The valuation is rarely fixed and so hard to establish for precise matters such as child support calculation or equitable division of property in divorce. Since it is difficult for courts to value assets such as cryptocurrency, they often use different methods in order to arrive at an appropriate fair market value. Date Payment, the value of the cryptocurrency on the date stipulated by the court (for example, at the time of filing a complaint) is relatively common.

Relevance of Disclosing Crypto in a New Jersey Child Support Cases

It is crucial for parties in divorce and child support cases to fully disclose all their financial holdings, including cryptocurrency. If someone fails to do this, they can face serious legal consequences. First of all, hiding cryptocurrency assets could lead to contempt charges. Additionally, courts may view non-disclosure as an attempt to evade support obligations, which could negatively affect the court’s rulings on custody, visitation, or support.

Cryptocurrency, as an asset and income source, can significantly impact your divorce and child support proceedings. Given its volatility and complexity, it’s essential to work with an attorney who can navigate the legal challenges it presents in order to ensure that you receive a fair outcome in support of you and your children moving forward.

Unravel the Nuances of Cryptocurrency and Digital Holdings in Your NJ Child Support Matter with Knowledgeable Legal Counsel 

Cryptocurrency can be complex and ever-evolving, and having a family lawyer with experience in digital assets ensures that all legal nuances are addressed and that your interests are protected. Given the nuances and challenges of handling cryptocurrency in legal proceedings, especially in divorce and child support cases, a skilled attorney at Bronzino Law Firm can offer invaluable assistance. Our experienced lawyers can help you understand how cryptocurrency holdings might be treated in your unique situation and guide you through the process of accurately disclosing cryptocurrency assets to ensure compliance with the law. We can also help you reach a child support arrangement that considers cryptocurrency income and assets, ensuring the fair treatment of all parties.

We proudly serve clients in Barnegat, Beach Haven, Harvey Cedars, Long Beach Township, Red Bank, Tinton Falls, Atlantic Highlands, Rumson, Brick, Sea Bright, Monmouth Beach, Little Silver, and through Southern New Jersey. Contact us today at (732) 812-3102  for a free and confidential consultation to discuss your case.