- Are miles and points separate or shared property?
- How you earn airline miles and hotel points
- How to divide airline miles or travel-related points
- Considerations
- Transfer policies of different airlines and hotels
- Drafting your settlement agreement
Any asset or debt you and your spouse acquired during your marriage is marital property. As part of a divorce settlement, you must divide this marital property fairly.
But what happens when one or both of you traveled extensively during your marriage, either for business or pleasure, and accumulated an extensive number of airline miles?
Are miles and travel points separate or shared property?
The first thing you need to do is determine if travel points, rewards, or miles are marital/community (shared) or separate property. They are almost always considered marital, and how they should be divided is a part of your settlement agreement. Unless the points or rewards were in one spouse's name only, began before the marriage, and only that spouse traveled, you should consider them up for division.
Airline miles are valuable to travelers and can be redeemed for flights, hotel accommodations, car rentals, and other perks. The miles accumulated by you or your spouse during your marriage are usually considered divisible marital property, even if they are only in one spouse’s name. Depending on how many miles you’ve earned, they can be important assets to consider in divorce settlement negotiations.
But how do you divide intangible assets like airline miles or hotel points or determine their value? Keep reading to understand where you might have travel-related assets like these, and how to fairly split them,
How you earn airline miles and hotel points
Not sure if you or your spouse have travel-related assets? Here is how they are earned. Check any airline, hotel, or other travel-related accounts to see if you have any sort of membership.
Airline miles
- Flying: Earn miles based on the distance flown or the price of the ticket.
- Credit cards: Earn miles through airline-branded credit cards for everyday purchases.
- Promotions: Participate in airline promotions or special offers.
- Partner programs: Earn miles through spending with airline partners, such as car rentals or dining.
Hotel points
- Stays: Earn points for hotel stays, often based on the amount spent.
- Credit cards: Use hotel-branded credit cards to earn points on purchases.
- Promotions: Accumulate points through special promotions or loyalty programs.
- Partners: Earn points through spending with hotel partners, like car rentals or dining.
How to divide airline miles or travel-related points
Can't evenly split into two separate accounts? Follow these tips to fairly divide travel assets like miles and points.
Determine the value
While airline miles don’t have a straightforward cash value, they can be appraised based on their potential redemption value. The value can vary depending on the airline, the destination, and how the miles are used (e.g., for flights, upgrades, or other travel-related perks). Experts often use an average valuation, such as 1.3 cents per mile, to estimate the total value for division purposes.
Options for how to divide the travel assets
Airline miles and points, while intangible assets, can be a significant source of contention in a divorce, especially if one spouse has been the primary earner of these points through business travel. Clear communication and setting realistic expectations during negotiations can help avoid disputes.
Dividing airline miles and travel points can be complex due to restrictions on transferring miles, potential fees, and varying airline policies. In many cases, couples might choose to offset the value of miles with other assets or agree to redeem the miles and split the benefits. Here are some options.
- Redeem and split: You can agree to redeem the miles for flights or other perks and then share these benefits.
- Offset with other assets: If transferring or splitting miles is not practical, one spouse might keep the miles while the other receives a comparable value in cash or other assets.
- Consider future travel needs: If children are involved, it might make sense to allocate miles to the parent who will be responsible for travel related to custody arrangements.
- If one spouse travels a lot, the other may just want to give them the travel assets in exchange for something more useful to them, or as a courtesy.
Tip: Divide travel assets during marriage before your judgment or marital settlement agreement is filed but after its signed – then you aren’t chasing down your spouse later.
Considerations for dividing airline miles and travel points
- Understand transfer limitations and costs: Before negotiations, both spouses should thoroughly understand the airline’s policies regarding the transfer or sale of miles. Some airlines impose significant fees for transferring miles, which could make direct division costly or impractical. This is particularly relevant for negotiations, as the cost of transferring miles could outweigh their value. See more on this below.
- Legal precedents and variability: The treatment of airline miles and travel points in divorce can vary by jurisdiction. Some states might have specific precedents or guidelines, while others may leave it more to the discretion of the divorcing parties.
- Documentation and evidence: Gather all relevant documentation, including account statements, to prove the existence and value of the miles or points. This documentation can be critical in ensuring that these assets are considered during the settlement process.
- Pooling points in advance: For airlines like JetBlue, which allow pooling of points among family members, consider creating a pool before the divorce process begins. This can make it easier to divide the points later, or both spouses might agree to continue sharing the pool post-divorce, especially if they have children who will continue to travel with both parents.
- Mediation for creative solutions: In mediation, there’s more flexibility to craft creative solutions. For example, if one spouse travels more frequently for work or has a more significant need for the miles, both parties might agree to let that spouse keep the miles in exchange for a greater share of other assets.
- Check expiration dates: Some airlines have expiration dates for miles if accounts are inactive for a certain period. It’s essential to account for this in your settlement, as miles that expire before they are divided could become a point of contention.
- Tax implications: While airline miles themselves are generally not taxable, any cash received in exchange for miles during a settlement could have tax implications. Consulting with a tax advisor during the process is advisable.
While the actual cash value of airline miles differs depending on the airline, research and analysis aggregator Value Penguin estimates that the average airline mile is worth approximately 1.3 cents.
Does your airline allow you to transfer miles?
Some carriers allow the actual transfer of miles subject to transfer and transaction fees, taxes, and other terms and conditions.
Delta Airlines
Delta Airlines lets you transfer miles in 1,000-mile allotments with a maximum of 30,000 miles per transaction. Transfers can only be between SkyMiles members. Transfer fees are $0.01 per mile and a $30 transaction fee plus taxes.
American Airlines
American Airlines lets AAdvantage members transfer miles to other member accounts only. Transfer fees are $12.50 per 1,000 miles and a $15 transaction fee plus taxes. Members can transfer or receive a maximum of 200,000 miles in a calendar year.
Southwest Airlines
Southwest Airlines allows the transfer of Rapid Rewards points to other members of the program. Transfers can be done in 500-mile blocks (1,000-mile blocks during promotional periods) with a minimum transfer of 2,000 and a maximum of 60,000 points per transaction. They charge $0.01 per point plus taxes.
JetBlue Airlines
JetBlue has a different take on transferring points between accounts. The airline allows family members and friends to pool points and share them at no cost, subject to terms and conditions. Consequently, if both you and your spouse are members of a family pool, both can use your share of the accumulated miles.
Hotels with easy rewards transfer policies
Hilton Honors: Offers free point transfers to any other Hilton Honors member, making it easy to share with a spouse.
Marriott Bonvoy: Allows transferring points to another member, with a maximum of 100,000 points per year. No fees involved.
Drafting your property settlement agreement
The less conflict in a divorce, the easier it is to negotiate respectfully and part as friends. If you and your spouse can mutually agree on property division and the other terms of your divorce settlement, it is likely to be less contentious and far more affordable.
At Hello Divorce, we believe there is a better way through divorce than an angry legal battle. A professional divorce mediator or collaborative divorce lawyer can help guide you and your spouse to a mutually agreed-upon divorce settlement that benefits you both. Schedule a free 15-minute call to find out how we can help.
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Suggested reading: How to Determine What Is Fair in Your Divorce
