What Happens to Airline Miles, Loyalty Points, and NFTs in Divorce
Dividing assets during a divorce in California isn’t limited to homes, retirement accounts, or bank balances. Increasingly, couples have intangible assets like airline miles, loyalty points, and digital holdings such as NFTs.
I’ve helped clients who underestimated the value of these assets, which led to disagreements when settlement discussions began. Understanding how courts treat these items and how to handle them effectively is crucial for protecting your interests.
I work closely with clients in Riverside, California, and Ontario, California, to organize, prioritize, and analyze all marital and separate assets. If you’re facing a divorce and want clear guidance on handling intangible property, reach out to me at the Law Office of Shelly Jean John to discuss your situation.
Airline Miles and Travel Rewards
Airline miles and travel rewards earned during marriage are generally considered part of the marital estate. If one spouse earns points through joint purchases or shared travel, those points are often marital property subject to division.
I usually begin by reviewing statements for all frequent flyer programs. This helps me determine which points were earned before the marriage and which were accumulated during. Points earned before marriage are usually considered separate property, while those earned jointly may be divided.
Redeeming or transferring miles can be tricky because most airlines have restrictions. I often advise clients to consider whether it’s more practical to assign specific accounts to one spouse or to calculate a cash-equivalent value for equitable division.
Loyalty Points From Retail and Credit Cards
Loyalty points from retail programs, credit cards, or rewards programs can also carry tangible value. In a California divorce, these points often count as marital assets if earned during the marriage. I review statements and account activity to determine how points were accrued and how they can be divided fairly.
I consider several aspects when analyzing loyalty points:
How the points were earned, whether individually or jointly
Restrictions, expiration dates, or limitations on redemption
Possibility of converting points into cash or tangible goods
Understanding these factors helps me organize the assets and advise clients on practical ways to divide them. Some couples agree to assign points to one spouse, while others calculate monetary value to include in the overall property division.
NFTs and Digital Assets
NFTs, or non-fungible tokens, have become increasingly common in personal and investment portfolios. I’ve seen NFTs treated as property that must be addressed during a divorce in California, but assigning value to them is challenging.
Valuation usually depends on market trends, recent sales, and potential liquidity. Unlike traditional assets, NFTs may not have stable or consistent values. I recommend documenting purchase prices, dates, and how the NFT is held or stored.
If it was purchased with marital funds, the NFT is typically considered a shared asset. Assets purchased with separate property may remain separate if they weren’t commingled with marital funds.
Identifying Intangible Assets
Identifying and organizing intangible assets is the first step in addressing them during a divorce in California. At the Law Office of Shelly Jean John, I ask clients to gather account statements, credit card rewards summaries, and digital asset records.
For NFTs, this includes blockchain records, digital wallets, and proof of purchase. Organizing assets in this way allows me to analyze ownership and value clearly. It also provides transparency during discussions with the other spouse or the court.
Tracking Ownership and Use
The history of how intangible assets were earned or used matters significantly. I often examine:
When airline miles were earned, and whether travel was joint
How loyalty points were redeemed and whether both spouses benefited
Whether NFTs were purchased or sold using joint funds
By tracking ownership and usage, I can prioritize assets, estimate their value, and suggest practical solutions for division. I strive for a fair and efficient distribution that meets everyone's needs.
Assigning Value to Rewards Points
Rewards points, whether airline miles or retail programs, may not have a clear cash value. I analyze historical redemption rates, current point values, and any associated fees to approximate their worth. Some airlines allow redemption for cash or gift cards, which can simplify the division.
This analysis helps me advise clients on whether to assign points to one spouse or compensate the other through other assets of equal value. Clear records of point accumulation and redemption are crucial in demonstrating the value during property division discussions.
Approaches to Dividing NFTs
Dividing NFTs can be more complicated than other assets. I recommend evaluating:
Whether the NFT can be sold or transferred
The potential value if it’s sold on the open market
How it was acquired and whether marital funds were used
In some cases, one spouse may retain the NFT while the other receives equivalent value from other assets. Though divorce in California can involve difficult decisions about digital property, careful documentation and fair valuation help me organize these assets effectively for a fair division.
Considering Joint Accounts
Joint accounts often complicate the division of intangible assets. When points, miles, or NFTs are tied to shared credit cards or accounts, I review account histories to determine how the assets were earned and used.
Some considerations I focus on include:
Which spouse controlled the account and redeemed points
Whether contributions were equal or disproportionate
Limitations on transferring points or NFTs to another account
Analyzing these factors helps me structure agreements that reflect both spouses’ interests. I strive to create a balanced outcome for everyone involved.
Tax Considerations
Dividing intangible assets can have tax implications. For instance, converting points to cash or merchandise may trigger taxable events. Gains from NFT sales may also be subject to capital gains taxes. I review these factors with clients to prioritize and organize assets to reduce unexpected liabilities.
Practical Steps for Clients
Handling intangible assets requires practical steps to organize, analyze, and prioritize them effectively. I typically suggest:
Identifying all accounts and assets earned during marriage
Separating assets accrued before marriage from marital property
Converting points to cash equivalents when feasible
Maintaining detailed records of transactions and redemptions
These steps allow me to analyze division fairly and prepare clients for settlement or court proceedings in divorce in California. I want my clients to feel informed and supported throughout the process.
Documentation and Record Keeping
Accurate record keeping is essential when addressing airline miles, loyalty points, and NFTs. I advise clients to maintain:
Account statements for airline and retail programs
Transaction histories for credit cards used to earn points
Blockchain records and wallet histories for NFTs
Detailed documentation helps establish ownership, value, and usage. It also creates transparency, which can simplify negotiations or court proceedings.
Agreements Between Spouses
Couples may agree on how to divide intangible assets without court involvement. I assist clients in drafting clear agreements that specify who will retain certain points, miles, or NFTs. Agreements reduce disputes and clarify expectations.
When spouses cannot reach an agreement, a court will analyze the nature, acquisition, and use of the assets. Assigning a cash value or compensating the other spouse with equivalent property are common approaches.
Converting Points to Cash
Converting airline miles or loyalty points to cash equivalents can make asset division easier. Some points can be redeemed for gift cards or statement credits, which can then be included in the overall property settlement.
I often calculate approximate values based on redemption rates, recent trends, and restrictions. This allows both spouses to see the tangible value of previously intangible assets.
Planning for the Future
Dividing intangible assets requires more than a simple calculation. I advise clients to plan for future use, including:
Monitoring point expiration dates
Evaluating potential changes in NFT markets
Adjusting agreements to reflect changes in value
Planning ahead prevents future disputes and helps maintain fairness after divorce in California. It allows both parties to move forward with clarity and peace of mind.
Summary of Strategies
I want my strategies to help clients protect their interests and reduce disputes over intangible assets. When addressing airline miles, loyalty points, and NFTs in divorce in California, the process includes:
Organizing and identifying assets
Tracking ownership and usage
Assigning a fair value for the division
Considering tax consequences
Maintaining thorough records
Drafting clear agreements when possible
Airline miles, loyalty points, and NFTs are increasingly relevant in California divorces. I approach these assets methodically, analyzing acquisition, ownership, and value to prioritize and divide them effectively.
Maintaining documentation, considering tax consequences, and planning for future changes are essential steps. Addressing intangible assets early can prevent disagreements and protect your interests throughout the divorce process.
Contact My Office Today
In facing divorce in California, it’s important to handle all assets—whether tangible or intangible—with care, transparency, and foresight. I’ve guided many clients through dividing airline miles, loyalty points, and NFTs by organizing, analyzing, and prioritizing those holdings.
By working closely together, you’ll be equipped to make informed decisions that reflect your goals and circumstances in Riverside County and San Bernardino County. Reach out today to get the support you need from me at the Law Office of Shelly Jean John.