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You are here: Home / Blog / Assessing Digital and Virtual Assets in Divorce

Assessing Digital and Virtual Assets in Divorce

August 31, 2016 By CD Texas Staff - p.w. Leave a Comment

When we help divorcing couples through a case in Collaborative Divorce, we rely on what’s called a “Roadmap to Resolution” to assist us in the process. One of the first steps in the Roadmap is to gather information.

Thanks to the digital age, the kind of information we’re gathering is expanding. I was first made of two new asset categories by one of the leaders in the Collaborative community, and someone who I work with on Collaborative cases regularly, San Antonio attorney Kim Munsinger.

These newest asset categories are “Digital” and “Virtual.” As this case dating back to 2005 illustrates, these assets bring up all sorts of questions regarding succession, privacy, and value. We’re still evolving our understanding of these, particularly in estate matters, but assessing digital and virtual assets is becoming increasingly important in divorce.

According to Techopedia, digital assets are any text or media that is formatted into a binary source and includes the right to use it; digital files that do not include this right are not considered digital assets. Digital assets are categorized into images and multimedia, called media assets, and textual content.

These include:

• E-mail addresses
• Social network accounts
• Web sites
• Domain names
• Digital media such as pictures, music, e-books, movies, videos
• Blogs
• Reward points
• Digital storefronts
• Artwork
• Data storage accounts

According to WhatIs.com, virtual assets are a representation of currency in some environment or situation. In this context, currency can be defined as either a medium of exchange or a property that have value in a specific environment, such as a video game or a financial trading simulation exercise.

These include:

• MMORPG’s (massively multiplayer online role playing games)
• Virtual pets
• Avatars
• Accessories for characters,
• Prizes
• Virtual real estate
• Virtual currency

The steps involved to include them in the marital estate generally follow those involved for other assets, with an additional aspect of attempting to value some level of intangible value. In order to do so, one needs to:

– Identify the existence of digital / virtual assets
– Characterize these assets (community / separate)
– Value these assets (may involve a complex analysis, since most of these costs are regarded as expenses rather than a capitalized asset. As such, the thought process most likely misses potential asset value).
– Divide them equitability or as agreed upon.

It may seem silly to haggle over some of the items on these lists—virtual pets and avatars in particular—but the more and more that we persist in the Digital Age, the more and more real these items become to us. And when we’re connected to them, we may be more and more reluctant to let them go, just like the other, more tangible things that we end up fighting over in a divorce.

Collaborative Divorce gives you the advantage of a financial neutral to help with assessing digital and virtual assets along with your more tangible assets — helping you in counting your bitcoins. This can be one of the most contentious aspects of any divorce, but an agreed-upon financial neutral helps avoid the pitfalls of litigation, in which one party might assert that a certain asset is worth more than the other party’s valuation, leading to fights about what it’s worth before getting to the fight over who gets it. In the still-evolving area of assessing digital and virtual assets, those debates can be especially challenging. Having a financial neutral on board can help you make those real debates about virtual things resolve more efficiently.

About the author: Richard D. Soat, a San Antonio-based financial professional with BDO (a professional services firm providing assurance, tax, financial advisory and consulting services) and a board member of the Collaborative Law Institute of Texas. The opinions expressed on this site are Rick Soat’s own and do not necessarily represent the views of BDO USA, LLP.

About CD Texas Staff - p.w.

Filed Under: Blog, Financial Professional Perspective on Collaborative Divorce

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