How to Divide Rewards and Keep Your Sanity in Divorce

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Divorce is a fact of life in the United States these days. According to a 2017 Gallup poll, 73 percent of American adults believe divorce is morally acceptable. And while divorce rates have declined in recent years, still 40-50 percent of married couples wind up going their separate ways.

Unfortunately for everyone involved, divorce is usually messy and sometimes even financially catastrophic. Not only does divorce signify the separation of a household and the end of a relationship, but it usually means divvying up all personal property and assets, too. (See also: How to Protect Yourself Financially in a Divorce)

What happens to airline miles when you get divorced?

But, what about your airline miles? If you're careening toward divorce and flush with rewards points, you may have to get used to the idea of splitting them up.

According to the legal experts at LegalZoom, airline miles and other points are treated like other marital assets because, well, they are. Even though points and miles aren't as easy to see and inspect as other property like cars or furniture, they still have value — at least to some people. If you or your spouse earned rewards points during your marriage, these miles are considered a marital asset, notes LegalZoom. As a result, you'll have to split them or agree upon some other arrangement.

Sadly, this is where things get complicated. LegalZoom notes that your method of divvying things up may vary based on where you live. If you reside in a community property state like California, for example, the courts will split your miles equally between you. In equitable distribution states like New York or Maryland, on the other hand, miles are divided based on what the court deems "fair."

You'll definitely want to consult your divorce lawyer if you or your soon-to-be ex are, say, sitting on a stash of hundreds of thousands of miles. Your attorney may already know the law in your state, and if not, they'll find out for you. (See also: 5 Money Moves to Make the Moment You Decide to Divorce)

Methods of divvying up miles and points after divorce

But how exactly do you divide airline miles and other rewards points? It depends on a number of factors. While splitting a stash of points and miles down the middle may sound like the fairest thing to do, it usually comes with fees.

Divide and transfer points

Take the Marriott Rewards program, for example. While the program lets you pool points with a spouse to make a specific award redemption, you'll have to pay $10 to pool points in any other case unless you have Marriott Gold or Platinum status.

That's not a high price to pay, but you may be able to get around it completely. Since Marriott points can now be transferred to Starwood Preferred Guest at a 3:1 ratio and Starwood does let you combine or share points with a spouse, both spouses could transfer all their Marriott points to SPG accounts then split them up there. Problem solved. Then again, paying a $10 fee to transfer points in a divorce seems like a small price to pay.

The IHG Rewards program lets you transfer points to another person but you'll have to pay $5 per 1,000 points transferred. While $5 per 1,000 points may be a small price to pay in the event of a divorce, this could be a problem if, say, one spouse has hundreds of thousands of IHG Rewards points in their account. In that case, both spouses might have to find another way to split up their rewards in a fair and sensible way.

Valuing points and miles

In some situations, you just can't split points up equally, or it might not make sense if the account has just enough points for one flight. In those cases, it might work better to assign a value to accrued points and negotiate payment or other property to make things equal. Unfortunately, this is another tricky situation since points and miles don't have a set value and may be worth more or less depending on how they are redeemed.

You can find help by checking monthly points valuations from The Points Guy, who analyzes point value fluctuations regularly based on the costs of travel and changes in rewards programs. At the moment, TPG says that American AAdvantage miles are worth 1.4 cents each, and Delta SkyMiles are worth a paltry 1.2 cents each.

If one spouse is to get 100,000 Delta SkyMiles and 200,000 American AAdvantage miles, the couple could use these valuations as a guide, then make sure the other spouse gets $4,000 to make things equal ($1,200 for 100,000 Delta SkyMiles and $2,800 for the 200,000 American AAdvantage miles).

Keep miles in separate accounts but agree on who can use them

Still, there are even more options on the table. If you can't or won't transfer points and don't want to pay each other in cash or other property, there are a few other ways to split up your points in a fair and equitable way. Many rewards programs that won't let you transfer points will let you book travel in another person's name. Because of this, you could keep airline miles where they are and agree on who can use them and when.

Agree to use miles for joint purposes

Alternatively, a divorcing couple could jointly agree to use miles only for purposes they agree upon, such as getting their children or other family members home for the holidays.

Don't sweat the small stuff

While airline miles and other reward currencies have financial value and fixed opportunity costs (since it takes time to earn them), most couples likely have balances so small they're not worth squabbling over. And just like money, you can always rack up more points and miles once you divorce and start living life on your own terms.

On the flip side, don't let a spouse flush with points get away with a huge stash of airline miles or rewards points just because the points are in their name and their name only. Points and miles may not have tangible value until you redeem them, but the travel they help you afford is often priceless.

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