Handling Miles in a divorce?
 

I have a friend (no, really!) who is going through a divorce at the moment, where the husband accumulated a substantial amount of miles/points due to business travel while thye were married.

In the settlement, my friend wants to know if these should be treated as assets, to be divided more-or-less equally.

Does anyone have any opinion on this or know of where the case has come up before? I won't tell you right now which party my friend is (husband or wife) so I won't bias your response.

(Any advice given will be taken freely without liability, and a divorce lawyer will be retained (is already, actually) to give my friend the final recommendation.)

Thanks to all!

No I do not think of it that way. They should NOT be considered as assets to be divided equally.

He earned them for time he spent in a plane, if she has an FF account, she earned them when she flew. This isn't cash, and as the airlines state quite clearly they do not have a cash value. Therefore they probably won't be and shouldn't be treated as community property.

In most cases, if the miles were accrued during the marriage, the miles would become a marital asset and therefore subject to becoming part of the settlement. (In states that are not common property states, marital assets include most things that either were acquired or increased in value during the course of the marriage.)
Of course, the tricky part would be to assign a value to the miles, but that's a whole 'nother issue.

There's no reason that the miles themselves would need to be divided. Rather, they -- or more specifically, their monetary value -- would become part of the pool of assets to be divided. For example, if the assets get split 50-50 and the miles are valued at $10,000, one person could get all of the miles, and the other would get $10,000 worth of other assets.

Miles are not taxable (yet)and as others have stated do not have a cash value, if the airlines do not treat them as a liability for accounting reasons, your friend shouldn't treat them as an asset. Perhaps, he/she could offer the soon to be ex a one-way ticket somewhere far away.

Do you think we should make potential spouses sign pre-nups specifically pertaining to mileage?



[This message has been edited by Leisuremiles (edited 06-18-2002).]

Have you encouraged your friends to go to counseling? It would be far better if their marriage could be saved than to go through a divorce. I will keep him and his wife in my prayers.

Thanks Flyingrev, unfortunately I think it is beyond counseling.

Thanks to everyone else, too. I found an article from the '98 InsideFlyer - looks like each airline/program has a different policy, regardless of what the divorce decree (or will) may say.

Now, I'm interested if there are any (legal) precedents out there?

Sure. Tell that to opposing counsel.

What have other divorces cases shown in the state where they will get divorced? That is where you will find your answer.

"He earned them for time he spent in a plane, if she has an FF account, she earned them when she flew. This isn't cash, and as the airlines state quite clearly they do not have a cash value. Therefore they probably won't be and shouldn't be treated as community property." - hfly

Hey! I don't think it's fair to say that since he "earned" them, he's entitled to them. What if she's at home with the kids each day while he's out earning miles?? Does that mean she she gets to keep the kids because she "earned" them. http://www.flyertalk.com/forum/redface.gif) In a divorce, even though the husband may have earned all the income, he's still required to split the assets equally even though they may have been bought with all his "earned" income. The wife may be doing her part in the household. I think she's entitled to her half of the points!!

Sincerely,
FT Women Activist
http://www.flyertalk.com/forum/redface.gif)

If a lawyer who knows his state's divorce laws has been retained to give the final recommendation, then why the heck are you soliciting opinions from people who are neither lawyers nor familiar with the laws of this unnamed state even if they are lawyers?


[This message has been edited by Quokka (edited 06-18-2002).]

The state in this case is Kansas.

I am asking because although divorce lawyers are experts in divorce, the audience here has a far more reaching field of knowledge about miles!

I am with FlyingRev and Quokka.

Maybe they should take some mileage and go on a trip to try to "find" what they seem to have lost in their relationship.

In any case, our opinion are just that.

A good friend of mine left her husband under threat of being killed. She left two teenage daughters behind. She sought NO payments, as he told her she would never collect them as she would be dead. She believed him (I did too) and that was that.

So what the law say and what happens is often somewhat apart.

People pledge to "love...each other until...". Then 1/2 of those people change there feelings sooo much that they cannot continue to live with that person anymore. Go figure? Divorce and death. Estates often cause the same type fueds.

Looks like we have an excellent race for who can come up with the most absurd comment -- well done, FTers!

Currently tied for 3rd place are hfly and pointsgirl, who are both clueless about marital assets.

Holding down 2nd place is flyingrev, and his gratuitous advice: divorce can be difficult enough without well-meaning outsiders who offer answers while being ignorant of the issues.

Well ahead of the pack in 1st place is ranles, who provides her/his advice in the context of divorce actions that are accompanied by death threats. Well done, ranles, to make the connection between the original poster's question and a putative homicidal maniac.

But the day is still young. Let's see what the next batch of posts will bring.

Wideman

Since frequent flier miles cannot be moved between frequent flier accounts, I don't see how she can gain ownership of any of the miles. Even if he said he didn't want them I don't think the airlines would allow them to be moved.

It may be possible for her to try to receive payment for a portion of the value of the outstanding miles, but then paying for lawyers to argue over the value of those miles may end up costing more than it's worth.

Usually, everything is up for grabs in a divorce proceeding.

Just remember that it does not hurt you to ask for this as a measure of settlement.

It is always a bummer to hear about failed relationships.

I'm going on the assumption that these were 100% earned on biz travel; Pending Company policy; a case could be made that the company owns them and lets the employee use them as he/she sees fit whether it be for free award tickets, upgrades, or other purposes like paying for lounge access. In that case, he/she could give them back to the company rather than give them to the spouse or just never claim them going on the basis that the miles, like all company property belong to the firm. The company just might allow him/her to keep the miles if returned by the employee (a handshake agreement with the boss). since they technically would not be his/her asset then the miles would not have to be pooled with the other assets.

IMHO, there is no way that these should be pooled. He/She should do whatever it takes to not have these included.

BTW, whatever happened to the non-transferability of miles? Does it apply in this case; from the airlines perspective I mean?

I have never understood some women's position that they are *entitled* to whatever they can get in a divorce. http://www.flyertalk.com/forum/rolleyes.gif Miles belong to whoever accrued them. If one person paid for all the tickets, then it's open for discussion.

Maybe Randy can help on this issue.

http://www.usatoday.com/life/travel/...quent-side.htm

Actually, I do know of one case where the person who had the miles in their account had to "purchase" tickets for the ex-spouse equal to half of the mileage total. They could either use miles or money to purchase those tickets.

(No, not me, as I am happily married. But we do tease each other about who would get all the points and miles!)

From an attorney's perspective, some of the replies above are really quite amusing, notwithstanding how authoritatively they are presented.

The only thing I can say is... they have frequent flyer miles in Kansas?

[This message has been edited by emaij (edited 06-18-2002).]

Well Jamie, you don't say where you are from, so I can't rebutt.

However, yes they do have frequeNt flier miles in Kansas - how else do you expect us to get anywhere useful! http://www.flyertalk.com/forum/wink.gif

Also, as mentioned before, I did find an old article in Inside Flyer - and different airlines have different policies. A sampling:

AA: The rules of the court decree apply.
AmEx: Points are not property and cannot be assets in any type of settlement.
CO: Miles are not transferrable, and can only be distributed in a settlement by cashing in for awards.
Delta, NW: Transfer OK, with a court order.
United: Not transferrable as part of a domestic relations matter.

I can speak from experience having gone through this in TN and yes she did get 1/2 the miles (at least the ones she knew about). My lawyer, perhaps not a good one, tried everything mentioned previously on this board but no luck. Community property/assets is all the judge kept saying. Good luck to your friend.

Once again the miles have no value, therefore in most places they are not something to be apportioned. BTW, we have no clue from the original post whether the wife has miles, whether she earns more money, nothing.

I am more shocked here by the idiotically old fashioned belief that all women in divorce are either worse off than the husband, or that they don't work AND that they are entitled to everything!

Exactly! Look at J. Lo! Wonder how much her hubby of a few months will get? http://www.flyertalk.com/forum/rolleyes.gif

This would make for an interesting colloquy:

Her honor, Judge Thumbthwart: Counsel, what is the value of your client's 500,000 British Airways miles?

Hfly, Esq.: Zero, your honor. The airline says the miles have no value.

Her honor, Judge Thumbthwart: How many Concorde round-trip tickets would the miles buy, Mr. Hfly?

Hfly, Esq.: Four, your honor.

Her honor, Judge Thumbthwart: And each of those tickets cost how much?

Hfly, Esq.: $12,500 each, more or less.

Her honor, Judge Thumbthwart: Thank you, Counsellor.

If I ever get divorced again, I do hope that my ex-to-be hires Atty Hfly.



[This message has been edited by wideman (edited 06-18-2002).]

The key appears to be to put as much as you can in Amex Rewards

Next Question, can a judge force you to move them out of AX Rewards

Or........

Q: How much are 500,000 miles worth??

A: Nothing according to the airlines, however according to how they make provisions on their books, approximately $300.


Or,

A: Well, you honour, I just gave them all to the make-a-wish foundation.

Or,

A: (To the attorney on the other side) Of course I'll give her $25,000 worth of tickets, should I take care of informing the IRS for you??

Lastly, in response to the above it could also be 12 economy tickets which recently went for $399 each (total value $4800), or if you want to go for the Concorde example, it would also be about $4800 as per the FT/Starwood deal.

This is why miles are a can of worms and why they are not reasonable "currency" in a divorce settlement.

Bzzt! The IRS doesn't care, because division of assets in divorce is tax-free. The man who takes legal advice from flyertalk has a fool for a lawyer. And no, I'm not a lawyer, but legal theory (as opposed to practice) tends to be remarkably close to common sense. If the state says that assets acquired during marriage are to be divided 50/50, they will be divided or properly valued and bought out.

If I were a judge, I'd let the two sides bid for a buyout of the other to establish the value of any asset, including FF miles. Simple, really. If one side wanted to claim they have no value, I'd agree and order them transferred to the other side with zero dollar credit to the donor of the miles. As you can see, I have a low tolerance for tricky and dishonest legalisms. (This *proves* that I'm not a lawyer.)

As to the original question, I think that the friend's lawyer should make a fair dollar offer to buy out the mileage, ideally including an offer to let the spouse buy *him* out on exactly the same terms. If the spouse turns the offer down, he has at least shown good faith and his value estimate is much more credible to the court.

The foregoing is common sense and is not legal advice. Some assembly required, batteries not included...

Lots of things that cannot actually be divided are considered in divorce settlements. It's not practical, for example, to slice a painting down the middle so each party gets half. That does not stop the painting from being treaated as an asset and considered in the settlement.

It is not always necessary to assign a monetary value to marital assets. The concept is to divide them into two piles until all parties - spouses, lawyer(s) and/or mediator as applicable, court - are OK with the split. Reducing things to monetary terms can simplify the process, since it provides a rational basis for weighing a painting against an automobile or a stock certificate, but isn't required.

I actually laughed out loud at your post wideman... first time ever while browsing a message board. Maybe that's a bad sign.

[This message has been edited by emaij (edited 06-18-2002).]

The problems with nearly all of the presented arguments are:

1. In nearly all FF programs, the miles are the property of the AIRLINE, NOT the account holder; and

2. FF miles have no cash value.

Wideman,

Thank you so much for pointing out that you think I am clueless and that I made absurd comments.
However, I think the original poster asked for our opinions, and I gave mine.

Form vs. substance. Ask a lawyer if you are unclear on the concept.

Yes, they are community property. I too went through a divorce and rather than split them, I sacrificed another asset which could not have been divided.

(Give up miles? What, are you nuts??)

scoop, I'm interested in how you valued the miles in the divorce and what you gave up to keep them!

From what I read on the original post, why would he even put them down on his list of assets.

I mean, it appears from the orig. post that she hasn't asked for them.

It could easily and reasonably be assumed that they are not his property, that they are property of either the airline or employer, or that he 'forgot'. I'm sure that in 99% of the divorces, airline miles are not that big of a deal.

If she asks for them, then the valuation problem will come in.

Finally, the more documentation he can get regarding value from the airline, or from an authoritative source.. yes even Randy.. will help support his cause once he needs to value the miles.

I would start by going to the airline(s) with the balance and seeing what I could get from them. If you don't get what you like, call again, isn't that the airline way..

Also, do they value these in their financial statements? If so that is a possible source.
What about using ebay to see what people are selling them for. Take all of these, or the lowest one. If that doesn't cut it, have a formula prepared that will give you the lowest value. Have a note from your employer, or if they do have a policy that the miles belong to the company, print it. If they are non transferable, print that rule. Print/Support anything you can that goes to his advantage.

Remember too, if she has any miles whatsoever, those can be used to offset his balance. If she has any outstanding credits from the airlines, use those to offset. Use whatever you can, that normally wouldn't be considered in the asset pool to offset his miles.

But why bring them up in the first place. I know one of you lawyer types will say b/c you have too.. again my arguement is that a reasonable person would not think of this as an asset. Not all people are like us here on FT where it is the most precious asset we own LOL

Maybe FTer's do about miles, but not about what constitutes an asset for divorce purposes. Disclose all to the attorney, let him/her decide.

My personal opinion - the miles are assets, whether or not there is a stated cash value associated with them. If your friend chose not to list them, that's his/her business, but the term "fraud" comes to mind.

If your friend does list them and has to attach a value, I would probably first try to value them at the airlines book cost per mile. Unless opposing counsel is clueless, I doubt this would fly. Cost to one person (or entity) doesn't usually equal value to another. My fallback position would be to find the cheapest third-party valuation I could find. Here's one ($0.01 per mile from a Travelocity contest) that he/she can use for supporting documentation:

http://www3.travelocity.com/promos/m...LOCITY,00.html

FYI: Kansas is not a community property state.

One way to avoid the problems with the miles is a pre-nup.

One issue is being missed here. You can divide miles (by giving some sort of money I suppose) but not STATUS. You can't split a GOLD in half!

Miles are temporary, lifetime GOLD is forever (or until the airline changes the rules)

------------------
munching toward one million AA miles.