BEWARE: DISCLOSURE OF DIGITAL ASSETS IN NEW YORK IS NOT ADDRESSED IN THE 2016 REVISION OF THE OFFICIAL FORM STATEMENT OF NET WORTH: PART TWO
H. Michael Stern, Esq., a New York matrimonial and family law attorney and mediator with over 30 years of experience suggests that New York residents, where appropriate, one should strongly consider digging deeper, beyond the four corners of the Statement of Net Worth, for digital assets.
In Part One of this blog, I addressed Bitcoins as an example of digital asset in divorce cases. I also noted that the official form of the Statement of Net Worth was updated in 2016. Each party in a contested matrimonial action is required to serve and file a Statement of Net Worth with the Court. It is mandatory financial disclosure in all contested cases. In many cases that are settled out of court, attorneys use the Statement of Net Worth as a representation under oath of the net worth of each party to the settlement. There is one class of assets that is omitted from the latest version of the official form. This may result in such assets being overlooked at trial or in a settlement. That class of assets are digital assets, assets which are intangible and exist only in electronic media. As there is no standardized definition yet of digital assets that is all inclusive (to my knowledge), I shall continue to address some (but not all) digital assets in this second blog which should be considered by divorcing parties and their attorneys.
The second example of digital assets are photographs. They can be family photos and videos stored electronically or valuable digital photographs. Family photos may be priceless to divorcing parties. The custodian of the digital photos may not possess them in traditional terms, such as on a personal computer, phone, or media storage device. Ever hear of the “cloud”? Well, there are too many cloud storage sites for me to mention in this blog, but I am sure you get the idea. Access to cloud storage and photos stored on social media (including facebook and instagram) are no longer possessed in traditional terms by a party. So, obtaining access to these photos should be addressed where the issue is an important one to the parties in a divorce. If a party to a divorce is a photographer by trade or hobby, there may be photos of real value (that if taken during the marriage) that should be treated as assets of the marriage.
Another, more sordid issue comes to mind. I had a case years ago which involved pornographic video content that the parties generated during the marriage. Parties may be reluctant to mention this to their attorneys, but it is important to gather the courage and discuss it, because it can be addressed by the Court in the disposition of marital property. That is exactly what happened in that case.
The third example is what I call “creative digital content”. Among other things, this can consist of digital manuscripts, books, artwork and videos (for example a Youtube sensation makes money every time someone clicks on a video as pay per click advertisements precede the content).
The fourth example are online (merchant) hobbyists who are Ebay, Amazon or Craigslist (to name a few) sellers who are not operating businesses per se, but are selling and making money online.
This is in contrast to a true online business which should be disclosed on the Statement of Net Worth.
These are just a few examples and I could go on and on. I did not address the deliberate concealment of funds or other assets in digital repositories. That subject is beyond the scope of this blog. The point is that these and other digital assets are not accounted for on the Official Form so it is important to be vigilant.
I have engaged in continuing education in this area. Focusing on the needs of the client and the results sought have always been a hallmark of my Long Island practice for more than 30 years.
Feel free to contact me, H. Michael Stern, Esq.,a Long Island divorce attorney, if you are interested in discussing your matrimonial, divorce or family law matter at email@example.com or by phone at 516 747 2290.
My office is conveniently located in Nassau County adjacent to the Roosevelt Field Mall ring road at 666 Old Country Road in Garden City, New York.
Written by: H. Michael Stern, Esq., Long Island Divorce Attorney