I recently read an article by The Points Guy about protecting your points before getting married. Points, most commonly acquired by credit card usage or travel, are often an overlooked asset when drafting a prenuptial agreement in anticipation of marriage or crafting a settlement agreement in anticipation of divorce. Because points can translate to substantial value in cash or in kind expenditures, they should be addressed in any prenuptial agreement you execute with your future spouse and should not be forgotten when identifying assets for purposes of equitable distribution.
As a general rule, the fundamental principles of equitable distribution apply to credit card points, airline miles, and other similarly accrued benefits. Any points acquired prior to marriage will be deemed separate property and any points accumulated during the marriage will be considered marital property and therefore subject to distribution upon divorce. In the case of airline miles, this may be true regardless of whether the benefits were accrued for family vacations or one spouse’s business trips. In the case of credit card points, the usage of the credit card, i.e., for marital expenditures or otherwise, may also be irrelevant.
Logistically, dividing points can become tricky if they are not acquired in a joint account. Some credit card companies and airlines do not allow for the transfer of points between parties. Moreover, the cash value may be pennies to the point, making the benefits difficult to value if they can’t be cashed out, but must be used by the points owner in exchange for goods and services. Because these policies vary by company, it is important to educate yourself on these issues for each specific company with whom you hold an account before it is time to divide your points.
Whether in the context of a prenuptial or settlement agreement, practical problems associated with dividing points can be overcome by allowing one party to retain the points as a trade-off for some other asset in equitable distribution. However, regardless of the arrangement you ultimately come to with your spouse, it is important not to overlook this type of asset, as doing so could result in leaving significant value on the table. And who doesn’t enjoy paying for travel with points and miles?