Are Reward Points Marital Property in Naperville?

 Posted on July 14, 2022 in Divorce

Loyalty programs are popular marketing strategies that businesses use to lure customers. The incentives of reward points, which are often exchanged for products and services, help companies retain customers. These intangible reward points are considered currency and can include frequent flyer miles, credit card points, as well as hotel, restaurant, and retail rewards. As trivial as it may seem, reward points are often contested during divorce proceedings.

Identifying ownership of reward points can be challenging. A divorce attorney who understands the complexities of equitable property division can determine if reward points are marital or non-marital property.

Two Ways Reward Points are Marital Property

 Timeline of accrual – Reward points earned during the marriage are deemed marital property. The credit card account holder’s name is inconsequential as long as the accrued reward points occurred during the marriage. Even if the accrued reward points were through business travel or expenses, points from a corporate credit card are marital assets. Although some credit card reward points are not transferable, some offer cash-back benefits. The value of reward points exchanged for goods and services could be estimated and included in the settlement. 

Commingling – Mixing reward points, like cash-back benefits, during the marriage is commingling. For instance, if cash-back rewards from a credit card are deposited into a joint bank account, a transmutation renders the assets as marital. Ownership of the reward points is no longer identifiable. Similarly, paying for a family purchase with a credit card will transpose the reward points as marital property.  

Three Ways Reward Points are Non-Marital Property

Timeline of accrual – If the reward points were earned before the marriage, these assets are non-marital. A prenuptial or postnuptial agreement can also help protect how reward points are to be handled in the event of divorce.  

Gift – If the reward points were transferred to or purchased for one party as a gift, then those reward points cannot be divided. 

Inheritance – Inherited assets are considered non-marital property in Illinois. Most credit card companies permit beneficiaries to redeem the credit card reward points of the deceased. Likewise, hotel loyalty programs allow the deceased's reward points to transfer. As for frequent flyer miles, many airlines do not permit the transfer of miles from deceased customers' accounts to their estate. 

Contact a DuPage County Divorce Attorney

At Pesce Law Group P.C., our divorce attorneys recognize how distressful asset division can be. We are reputable, steadfast, and treat our clients with dignity. Our family law attorneys and our team of professionals are committed to mitigating disputes and achieving agreeable solutions. For a free consultation, contact a Naperville divorce lawyer at 630-352-2240. 

Sources:

https://www.investopedia.com/terms/l/loyalty-program.asp

https://www.investopedia.com/terms/c/cash-back.asp

https://www.forbes.com/advisor/credit-cards/best/business/

https://www.forbes.com/sites/jefflanders/2013/06/26/divorce-who-gets-the-air-miles/

https://www.fool.com/the-ascent/credit-cards/articles/what-happens-to-your-points-and-miles-when-you-die/