Published: 21 October 2016
The need to consider new forms of property and business in family law disputes
Did you know that the domain name koala.com.au sold recently for $50,000? As new forms of property and business enter the marketplace - such as domain names, Bitcoin, apps, social media accounts, crowd sourced finance and other profitable hobbies - family and relationship lawyers must re-consider the way they think about the assets available for a division of property upon the breakdown of a relationship.
The nature of the digital economy demands that new kinds of assets be considered in family law property settlements these days.
This was just one of the topics covered by the 17th National Family Law Conference this week. Speakers at the conference emphasised the need for lawyers to be more investigative when questioning clients about their assets in the digital age.
New property assets unstable in value
Due to the unstable and viral nature of new forms of property, the identification and valuation of such assets may be critical to family law proceedings. The value of new kinds of assets are uncertain and sensitive to external factors such as what is is ‘trending’ online, or changes to the law.
The value of Bitcoin, for example, went through troughs internationally when Russia banned its use, but now sits around $820 dollars per bitcoin. A few months ago, lucrative Pokémon Go in-game accounts were worth thousands of dollars, but have now lost significant value because the game is no longer ‘viral’.
The timing of valuations of new kinds of property can therefore be extremely important in identifying the value of the asset pool available for division. When value is so unstable, lawyers must act quickly in seeking a valuation from an appropriate expert.
New businesses require new approaches to valuation. From a traditional business valuation perspective, the low income generated from a phone app, without proper examination of the potential possibilities of the app, its online presence, the intellectual property of the app, may lead to an incorrect valuation.
However, new kinds of property and business have not revolutionised the concept of property completely, and may be treated similarly to more traditional forms of property or business in family law proceedings where appropriate. The income received by a party from a profitable Airbnb account or Uber business, may simply be treated as rental income or income from contract work usually seen in family law proceedings.
While these new forms of property remain unusual in everyday family law disputes, family lawyers need to familiarise themselves with the growing list of emerging assets and businesses that are part of the digital economy.
Equally, they need to act quickly in having them valued by experts, or risk short changing their clients when a property division is settled.