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How are reward points divided in a Texas divorce?

On Behalf of | Jan 31, 2025 | Divorce |

Frequent flyer miles and reward points may not seem like traditional assets, but they hold real value for many couples. In Texas divorces, where community property laws apply, these benefits often create disputes. Knowing how to handle these points ensures fair treatment.

Determining whether points are community or separate property

Texas law treats assets acquired during marriage as community property, giving both spouses equal ownership. Miles or reward points earned during the marriage usually count as community property, regardless of whose account contains them. Points earned before the marriage or through a program linked to one spouse’s separate credit card or business often count as separate property. The program’s specific terms also influence whether the points can transfer.

Calculating the value of reward points

Dividing reward points requires assessing their value, which often presents challenges. Airlines and credit card companies use varying redemption rates based on how someone redeems the points. Courts often request fair market value estimates, such as the cash equivalent of points when redeemed for travel or gift cards. Some programs issue detailed statements that show point values, which help in property division discussions.

Methods for dividing points between spouses

Dividing the points depends on the program’s rules and both parties’ preferences. Some programs allow point transfers between accounts, while others block such transfers. When programs restrict division, courts often allocate the points to one spouse and balance the other’s share with an equivalent asset. Spouses may also agree on their own arrangements, like sharing future point use under specific conditions.

Considering the program’s fine print

Program rules significantly influence how to divide these assets during a divorce. Certain programs void points if someone tries to transfer them, while others limit access to the account holder. Spouses should carefully review these terms to ensure a fair division that respects the program’s restrictions.

Understanding the complexities of reward points can help couples ensure equitable treatment. Fair handling of these assets supports a balanced outcome during the property division process.

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