During a divorce, both parties may be subject to having certain assets or benefits divided. In most cases, the court will determine what is equitable, which may not be the same as what is equal.
While most people assume that the primary targets for division are bank accounts, investments, and physical property such as vehicles, other joint assets can also be included in a judgment.
Frequent flyer miles and airline loyalty points are no exception, but the division of these accounts can create additional challenges that benefit from the help of a divorce attorney.
Here is what divorcing partners need to understand about airline mile division eligibility and potential workarounds to retain as much value as possible.
Evaluating Ownership and Accumulation
In order to determine how airline rewards may be divided in divorce, the first step is to identify which points are marital property.
Any airline frequent flier programs that a spouse joined after the marriage, and potentially, points earned in existing programs after the marriage date, may be eligible for division.
The airline also matters. JetBlue, for instance, has implemented a Points Pooling program that allows multiple family members (including spouses) to hold their rewards in a single account owned by all.
Division of these points may be more complex than dividing the value of separately owned accounts and may require documentation of who took flights or earned points and when those occurred.
Negotiation and Settlement: Practical Steps for Division
If frequent flyer miles are being included in a divorce asset division, the best option for both parties is to come to an amicable agreement about how to divide the points or benefits.
If an agreement can not be reached, the assistance of an attorney can be a beneficial step in resolving the issue. The applicable methods for effectively dividing flyer miles is also dependent on which airline is issuing them.
For frequent flyers with Delta and Southwest, points may be transferred among members, though there are limits (e.g., maximum of 30,000 miles or a minimum of 2,000 points).
Many airlines charge transaction fees as well as some small expenses (such as one cent per point plus any applicable tax). Therefore, transferring miles can incur tangible costs alongside the value of the points or miles.
Not all airlines or programs allow points to be transferred. In these cases, an alternative solution will need to be reached, or the points must be cashed out.
United, for instance, allows members to turn their points into gift cards, which may be a method of cashing out otherwise undividable points.
Alternative Dispute Resolution
If the divorcing parties need to divide airline rewards, the only alternative is not necessarily working within the rewards schemes themselves.
If an airline does not allow points transfers, or if the financial consequences of a transfer outweigh the benefits, one party can elect to pay the value of the miles in cash during the divorce settlement and then grant account ownership of the full airline rewards balance in exchange.
Alternatively, as in the case with a points pool, one spouse may elect to use their share of the points, such as to book a vacation. Then, the only remaining points in the account belong to one spouse only.
Trade is another option; if the valuation of the airline rewards points is $16,000 and one of the individual’s vehicles appraises at $15,000, a spouse may elect to accept the vehicle in exchange for signing ownership of the full airline rewards balance to the other party.
If the two cannot find an amicable compromise, an attorney may be able to recommend an equitable division of loyalty points.
If no agreement can be reached, the spouses will rely on the court to distribute their frequent flyer miles in a manner most appropriate, which may incur fees and additional costs.
Divide Intangible Assets During Divorce
Property division matters can quickly become challenging during divorce, even when they have defined dollar amounts value.
However, in the case of less tangible assets such as airline frequent flyer miles and loyalty points, it is best to involve an experienced attorney who can assist you in determining a strategy to divide points without losing value where possible.
In many cases, the attorney will develop mock travel itineraries using points in order to demonstrate their value to the court and place a tangible dollar amount on their use.
From here, the other party may elect to transfer their miles, pay their value in cash or another asset, or contribute in another manner.
The attorneys at Milstein Siegel want you to maintain as much of your property as possible during a divorce, including your frequent flyer miles. Contact Milstein Siegel for help dividing your loyalty points without losing money during asset division.