Protecting Your Cryptocurrency Assets in Illinois Divorce

Understanding Marital vs. Non-Marital Property

Illinois follows the equitable distribution model, meaning marital property is divided fairly (not necessarily equally). However, non-marital property generally remains with its original owner. For cryptocurrency, the key question is: When and how was it acquired?

Cryptocurrency as Non-Marital Property

Under 750 ILCS 5/503, cryptocurrency may be classified as non-marital property if:

• Acquired before marriage — Bitcoin purchased before the wedding date
• Received as gift or inheritance — Crypto inherited from family or received as a personal gift
• Purchased with non-marital funds — Crypto bought with inherited money or pre-marital savings
• Excluded by valid agreement — Prenuptial or postnuptial agreement specifically addressing crypto

The Commingling Challenge

The most common way non-marital crypto becomes marital property is through commingling:

• Depositing marital income into accounts holding pre-marital crypto
• Using marital funds to pay exchange fees or gas costs
• Reinvesting crypto gains into new tokens during marriage
• Transferring between wallets that mix marital and non-marital assets

Tracing Requirements

To maintain non-marital status, you must be able to trace the original asset through all transactions. This requires meticulous record-keeping of wallet addresses, transaction hashes, and account statements.

Prenuptial Agreements and Cryptocurrency

A properly drafted prenuptial agreement can:

• Clearly designate specific wallets as non-marital property
• Address appreciation — will gains during marriage remain non-marital?
• Establish valuation methodology for future reference
• Define disclosure requirements during marriage

Requirements for Enforceable Prenups

Illinois courts require prenuptial agreements to be:

1. In writing and signed by both parties
2. Entered voluntarily without duress
3. Based on fair and reasonable disclosure
4. Not unconscionable at enforcement

Postnuptial Agreements

Already married? A postnuptial agreement can still protect cryptocurrency by:

• Reclassifying marital crypto as separate property
• Establishing ownership of future acquisitions
• Setting valuation terms for potential future divorce

Practical Protection Strategies

1. Maintain Separate Wallets

Keep pre-marital crypto in dedicated wallets never used for marital transactions.

2. Document Everything

Preserve screenshots of holdings at marriage date, transaction records, and original purchase confirmations.

3. Avoid Commingling

Never deposit marital funds into accounts holding non-marital crypto, even for fees.

4. Consider Trusts

A properly structured trust can provide additional asset protection and estate planning benefits.

Key Takeaways

Protecting cryptocurrency in Illinois divorce requires proactive planning and meticulous documentation. Whether through prenuptial agreements, careful separation of assets, or proper tracing records, the time to protect your crypto is before problems arise—not during divorce proceedings.

Written by Jonathan D. Steele

Chicago divorce attorney with cybersecurity certifications (Security+, CEH, ISC2). Illinois Super Lawyers Rising Star 2016-2025.

Free Consultation

For more insights, read our Divorce Decoded blog.