Splitting Income - Travel Miles & Reward Points

Forensics, Investigation, Litigation

Some professions turn the everyday person into a “road warrior.” With countless hours spent in airports, airplanes, taxis and hotel rooms, it doesn’t take long to rack up significant airline miles and hotel chain rewards. It’s understandable that free travel, upgrades and other perks feel like a badge of honor for those enduring the hassle of so much travel. When facing divorce, road warriors may feel possessive of these points—and they might be surprised if they have to share them with their soon-to-be exes.

In many states, travel points accumulated during marriage are considered a marital asset subject to equitable distribution. But how do you determine the cash value of these points?

One of the easiest ways, when allowable, is to divide the points into two accounts. Any fee to transfer points should be considered in any equitable distribution settlement.

At times, points are not transferrable—even in the event of divorce. For example, Marriott specifically states on its website, “Points are not transferable to another person for any other reason, including divorce or inheritance.” In these cases, there are other options:

  • If the airline or hotel places an actual cash value on the points, the points can be valued with 50 percent of the value awarded to the other spouse from another asset during the asset equalization process.
  • If there’s no cash value assigned, do your best to estimate the value of the points. If a first-class airline ticket worth $1,500 takes 40,000 airline miles, then 500,000 airline miles are worth approximately $18,750. This same methodology can be used for a night’s stay at a hotel. However, this method can be tricky, as the value can vary based on destination, location or time of year.
  • One spouse could maintain the points and agree to distribute half to the other spouse upon request. This option may not be favorable, though, as it requires communication and cooperation between the divorcing parties.
  • Although not typically the most valuable way to use points, you may be able to convert the points into gift cards and split them evenly.

Valuing virtual assets such as reward points is not always straightforward, but the value could be significant enough that they shouldn’t be overlooked when working through a settlement of marital property.

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