Who Gets Frequent Flyer Miles in a Divorce?

from bbthompsonlaw.com

With frequent flyer miles becoming more popular and more valuable, it is only a matter of time before divorce lawyers will begin making miles and points a more common issue in proceedings. What is the monetary value of a frequent flier mile? In most cases, it doesn’t actually matter because it will be redeemed for airline tickets; but in the case of a divorce, determining their value has become an increasingly common problem.

It’s now obvious these miles are valuable assets, especially when they have been accrued in large numbers over time. Most airlines prohibit the transferring of miles from one person to another – even in the case of divorcing couples – so other arrangements must be made. This begs the question: Are Frequent Flyer Miles property?

During the marriage itself, they are usually considered divisible property. And in most cases, the miles are considered a marital benefit that is subject to division in court. Despite the legal view on airline miles, often a spouse will try to argue that they deserve them since they had to endure the discomforts of business travel. If you honestly look at it, a spouse’s employer is the one who really paid for the airline flight. The employer’s willingness to let an employee keep the frequent flyer miles for personal use creates a situation where they can be viewed like ordinary income which, in turn, becomes community property.

Most divorce lawyers will not go after a few hundred miles/points; however, when an “ex” has a few hundred thousand or a million frequent flyer miles, it could be worth their time. Frequent flyer miles (and credit card or hotel points) should be valued with “relative ease” because each program tells you exactly what you can expect to receive if you use a specific number of miles or points.

In nearly all cases of divorce, miles and points are typically not included in the initial settlement because the valuation process is too inconclusive. In fact, many couples simply opt not to argue about it at all. But for the divorces in which they are included, there’s often a real fight for them.

As of yet, no court has been willing to make any firm or definitive declarations outright, including Texas. Some have treated miles as a marital asset without specifically declaring them property. In others, the courts have divided miles between parties, a division that was not questioned on appeal. One of the keys to determining whether something constitutes property is the concept of transferability. Rarely will a property interest be found if the owner cannot transfer an asset to another.

So, in the absence of any clear or fair way to value frequent flyer miles, many have suggested the only equitable means of division is to simply split the miles. But, the program itself may not be willing to play along. In the absence of a court order, not every program will simply set up a new account. In that case, the division needs to be done “indirectly,” e.g. strictly between the parties. Under a written agreement, the mileage owner doles out awards in the other party’s name over time. The willingness and benevolence of the parties can lead to unlimited solutions.

And finally, another common solution is for divorcing couples to allocate miles for equal benefit. For example, they might set aside a certain number of miles for their children to use when traveling back and forth from college. Again, it really depends upon the amicability between spouses and their ability to reach decisions that will benefit them both equally.

The bottom line is that if you want to keep your frequent flyer miles, make sure you have something to trade for that value.

 

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