What Happens to Frequent Flyer Miles and Rewards Points After Divorce? | Los Angeles Divorce

When most people think about dividing assets during a divorce, their minds immediately jump to tangible items like houses, cars, and bank accounts. However, there’s a less obvious but potentially valuable asset that often goes overlooked: frequent flyer miles and credit card rewards points. In California, these rewards are considered community property, meaning they belong to both spouses if earned during the marriage. Understanding how to handle these hidden assets can make a significant difference in your divorce settlement, ensuring you don’t lose out on thousands of dollars in value.

In this article, I’ll walk you through everything you need to know about frequent flyer miles and rewards points in a California divorce. Whether you’re currently going through a split or simply want to be prepared, this guide will help you identify, value, and fairly divide these assets. Drawing from real client experiences and legal insights, we’ll explore how to navigate the complexities of rewards points — so you can protect your financial future and get a fair settlement.

Why Frequent Flyer Miles and Rewards Points Matter in Divorce

Frequent flyer miles and credit card rewards points might seem like small perks, but when accumulated over years, they can be worth thousands of dollars. These points can be redeemed for flights, hotel stays, gift cards, or even cash equivalents, making them valuable assets. In California, anything earned during the marriage is considered community property, which includes these rewards.

Many divorcing couples focus solely on traditional assets, unintentionally leaving these rewards out of the settlement. This oversight can lead to one spouse losing access to significant value. For example, imagine a couple where one spouse has accumulated 500,000 airline miles during the marriage. Without accounting for these miles, the other spouse could lose out on a valuable portion of the couple’s shared assets.

It’s crucial to remember that all rewards points earned during the marriage should be treated as joint property. Ignoring them could mean leaving money — or miles — on the table.

Understanding the Different Types of Rewards Points

Not all rewards points are created equal. When it comes to dividing them in a divorce, understanding their characteristics is essential. Here’s a quick breakdown:

• Airline Miles: These are often the most complicated to divide. Many airlines do not allow miles to be transferred between accounts, especially in a divorce context. This means you can’t simply split the miles and give half to each spouse.
• Credit Card Rewards Points: These points are often more flexible. Some credit card points can be redeemed for cash, gift cards, or travel, and in some cases, they can be transferred or split between spouses.
• Hotel Points and Other Loyalty Rewards: Similar to airline miles, the rules vary depending on the program. Some may allow transfers, while others do not.

Because of these differences, it’s important to evaluate the specific rewards programs involved in your case. Knowing which points can be transferred or cashed out will influence how you handle them in your divorce settlement.

How to Value and Divide Rewards Points in a Divorce

Since you can’t always split rewards points like you would a bank account, alternative approaches are necessary to ensure a fair division. Here’s how to handle it:

1. Valuation of Points

The first step is determining the value of the rewards points. This can be tricky because the value varies depending on how you redeem them. For example, airline miles might be worth different amounts depending on the route or class of service, while credit card points may have a fixed cash redemption rate.

A practical approach is to estimate a fair market value based on typical redemption options. For instance, if 100,000 miles can typically be redeemed for a $1,000 flight, then 500,000 miles might be valued around $5,000. It’s important to document this valuation carefully to present it clearly in your settlement agreement.

2. Offsetting with Other Assets

When miles or points can’t be split or transferred, one spouse can be awarded the full amount, while the other receives equivalent value from another asset. For example, if one spouse has 500,000 airline miles that can’t be divided, the other spouse might receive an equivalent value in cash, property, or other marital assets.

This method was successfully used with one of our clients who had a large balance of non-transferable airline miles. Instead of trying to split the miles themselves, we offset their value with other assets in the settlement. This approach was not only fair and equitable, but it was also court-approved, making the divorce process smoother and cleaner.

3. Including Clear Terms in the Divorce Agreement

To avoid confusion or disputes later, it’s essential to include clear, detailed terms about rewards points in the divorce agreement. This should cover how the points are valued, who gets them, and what happens if the points expire or change in value before they’re used.

Having these terms spelled out protects both parties and helps the court enforce the settlement if necessary.

Real Client Example: A Case Study

We recently worked with a client who had amassed 500,000 airline miles during the marriage. Unfortunately, the airline’s policy did not allow the miles to be transferred or split between accounts. This could have been a major sticking point in the divorce.

Instead of getting bogged down in trying to divide the miles themselves, we took a practical approach. We assigned a fair market value to the miles and negotiated an offsetting asset to the other spouse. This meant one spouse received the miles outright, while the other spouse received an equivalent value in other marital property.

This solution was clean, fair, and court-approved, demonstrating the importance of considering every asset — even those that might seem intangible or complicated.

Why It’s Crucial to Identify and Include Rewards Points in Your Divorce

Failing to account for frequent flyer miles and rewards points can have significant financial consequences. These points can represent thousands of dollars in value that you could lose if overlooked.

By identifying these hidden assets early, you can ensure they’re properly valued and included in your settlement. This comprehensive approach leads to a more balanced and equitable division of property, protecting both parties’ interests.

At Divorce661, we specialize in uncovering these hidden assets and making sure they are handled correctly. We understand the nuances of rewards points and how to include them in your divorce agreement in a way that is clear, fair, and legally sound.

How Divorce661 Can Help You Protect Your Rewards Points

Divorce661 offers flat-fee divorce services that include asset valuation support, helping you identify and protect all your marital assets — including rewards points and frequent flyer miles. Our services are 100% remote across California, providing convenience and expert guidance throughout the process.

We work closely with you to:

• Identify all rewards points and miles earned during the marriage
• Determine their value based on current redemption options
• Negotiate fair and court-ready terms for dividing these assets
• Include clear language in your divorce agreement to avoid future disputes

Our goal is to help you get a fair and comprehensive settlement that covers every detail — right down to the last reward point.

Conclusion: Don’t Leave Any Asset Behind in Your Divorce

Dividing assets in a divorce isn’t just about the big-ticket items. Frequent flyer miles and rewards points can carry significant value and must be considered community property if earned during the marriage in California.

Understanding the differences between types of points, how to value them, and creative ways to divide them ensures you don’t lose out on these hidden assets. With careful planning and expert guidance, you can achieve a fair, balanced settlement that protects your financial future.

If you’re facing a divorce and want to make sure every asset — including your rewards points — is properly accounted for, visit Divorce661.com for a free consultation. We’re here to help you divide everything fairly, efficiently, and with peace of mind.

Don’t overlook your frequent flyer miles and rewards points. They could be worth thousands in your divorce settlement.