Divorce and Miles
 

Following is an article that appeared in our local paper over the weekend relating to divorce and mileage that one spouse may have. I found it interesting and wondered if anyone had an actual experience that they wanted to share or an opinion that differed from the article.


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FLYING SOLO
JAN WARNER AND JAN COLLINS

In a divorce, don't overlook assets like airline miles and hotel points

KNIGHT RIDDER NEWS SERVICE

December 6, 2003


QUESTION: My husband and I are in the midst of a nasty divorce after 25-plus years of marriage. Since our only child is self-sufficient, all that's left are arguments about money and property division.

Since we got married, my husband has been with the same company and travels all over the world. Our standard of living included trips paid for by the company as bonuses for production, and we went away on a nice trip at least once a year. My husband has stockpiled frequent flier points, and because his company always sends him first class, he has more than a million miles on two separate airlines. He also has sports tickets and club privileges to professional football and basketball games in our area, hundreds of thousands of credit card bonus points, access to the company gym, etc.

My lawyer has told me that these things don't count and that it would be a waste of time and money to try to value them. I don't know if I agree with her because they have been acquired during our marriage and are part of our standard of living. I am asking whether I should pursue these "perks" or let them go.
ANSWER: While the final decision belongs to you and your lawyer, we believe that based on the facts you have described, "there's gold in them thar hills."

At the annual meeting of the American Academy of Matrimonial Lawyers, Leonard Karp, a matrimonial lawyer from Tucson, Ariz., made a presentation about identifying unusual, overlooked, and exotic assets. Here are some of the items he identified:

Frequent flier miles, credit card reward points and hotel reward points; security deposits for utilities and telephone; future interests in property (such as remainder interests that can be valued based upon actuarial tables); leased property such as time shares and vehicles; stock options; early retirement benefits; non-vested deferred compensation plans; unused vacation and sick leave that has been accumulated and is paid at the time of retirement; pending income-tax refunds and overpayments of taxes; net operating loss and capital loss carryforwards, and charitable contribution carryforwards that can be used in subsequent years; intellectual properties such as trademarks, patents, copyrights, and contracts for royalties; governmental marketable licenses (such as radio licenses, fishing quotas, etc.); "golden parachutes"; hobby collections (such as Lionel train sets, etc.); future credit against the purchase price of the same product; retirement survivor benefits; sperm and/or unfertilized human eggs; contract rights; country club and other memberships that can be transferred; warranties; licenses and other rights to purchase sporting and entertainment tickets; lottery tickets; information databases; goodwill and celebrity goodwill; and reimbursement considerations with regard to premarital and post-marital agreements.

While a few thousand frequent flier miles may not be worth pursuing, millions of miles and millions of credit card and hotel "usage points" probably are.

When it comes to country club memberships and the like, prior sales or transfers might give you the information you need.

Jan Collins is a writer and editor. Jan Warner is a matrimonial, tax and elder-law attorney. Both are based in Columbia, S.C.

i was once on a jury panelin a divorce case where it was settled before the trial when they agreed on the disposition of the national geographic magazines. many of we flyertalkers would agree that mi's are valuable....there are threads on mi's in one's estate & many airlines will honor the inheritance.

state law will come into play, but she should try for a fare [ha ha] share.

But wouldn't it be against the 'transferability' rules of most programs?

Even when married, you cannot give your miles to your spouse, only book an award and 'gift' them.

I think the key is... you may not be able to transfer... but a court could value them... and decide to give something equivalent (other valuables or cash) to the other side to compensate.

Yes, another example is stock options. Those are not transferable as well, but you bet that the opposing side is going to value them and ask for their share.

I would think that it does not make sense that someone is legally required to split them in a divorce for these reasons:

1. They are not transferrable according to the rules of the program.

2. Their value is not easily able to be calculated. That is why the IRS has (thankfully) shyed from taxing them. You can use the value that the airlines uses in their accounting if you want, but that amounts to about $20 per 25k miles. Even if you have 1 million miles, that only amounts to $400 - hardly worth pursuing. On the other hand, there is the value that the airline sells them at, about 2.5+ cents per mile, but that is an amount that no one in the right mind would pay unless a small amount is needed for a threshold (and in even those cases, I still would not pay that amount). Since they were (probably) not purchased, that value cannot be used either.

Their value is, in this case, "in the value of the beholder (owner)" in how he uses them. For that reason, I do not see how one could legally attribute a value to them for division in a divorce.

the value of ff mi's depends on the use. upgrading on international flights can often result in a value of ~ 8 cents/mi when taking into account the cost of a business ticket. this is my most often use of mi's. the other frequent use is last minute flight needs.

That is true, but due to capacity controls and blackout dates, miles are not nearly as easily usable as cash and that is another wrench in the equation.

Again, use the example of stock options. Mr. Jones is an executive at a company that has given him 100,000 stock options. 1 - they are not transferable to anyone else, and 2 - their value is not easily able to be calculated.

Are you implying that they do not have value?

Anything can be valued in a divorce, and it happens every day a court is open, somewhere in the USA. If you won't trust a lawyer or accountant for the proposition that this is so, peruse the files at the office of the clerk of court.

Marry in haste, repent at leisure.

Marriage is grand; divorce is 50 grand.

You know why divorce is so expensive? Because it's worth it!

Great post!!!


AA says in their membership guide that miles are not owned by the account holder.

Like so many other things fought over the cost of legal research and accountants presenting arguements about the value of miles could easily eat up the value of hundreds of thousands if not millions of miles. But hey that's what divorce is all about. 2 attorneys playing on the emotions of 2 angry people convincing them to destroy their joint net worth to make sure the other one doesn't get any of it.

A friend of mine had a provision in his divorce settlement that he had to provide his spouse so many miles per year for her use. Some thing like 125K for a period of like 5 years.

Oh, and a joke I just heard, A man tells his friend, "I think my wife died, the sex is the same, but the dishes are really piling up in the sink."

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dallasflyer, Let's put the fun back in FlyerTalk!

Hilton will divide the miles in a divorce. I had to fax them a copy of the divorce agreement where we agreed to a slpit ( not 50-50). I have since donated a GLON and a few American tickets to my ex so she can take our children to Puerto Rico for spring break. For me, the free vacation generated a lot of good will, something which can be in very short supply in divorcing couples. In a divorce, something only has to have perceived value to become an issue.



[This message has been edited by Schutzee (edited Dec 12, 2003).]