Frequent flyer points: what happens when you divorce or die?

Australians own piles of frequent flyer points, sometimes worth more than $50,000, so it’s wise to know what happens to them.

Anthony KeanePersonal finance writer

@keanemoney

3 min read

February 23, 2023 - 9:30AM

The Australian Business Network

Steve Hui on making the most out of frequent flyer points

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Frequent flyer points have become significant financial assets for many Australians who hoarded them during the pandemic, and as the use of credit card and shopping reward programs grows.

Savvy consumers are collecting tens of thousands of points per year to buy future flights or goods and gift cards at the Qantas or Velocity rewards stores, but what happens to their points if they divorce, die or suffer another major life event?

The value of each frequent flyer point varies widely depending on how you use them, says The Champagne Mile founder Adele Eliseo.

“On the lower end of the scale, frequent flyer points used for goods and gift cards deliver a value of 0.5c to 0.7c per point,” Eliseo says.

However, points used to purchase business or first-class flights and upgrades can be worth 5c or more per point, she says.

“That’s up to ten times or more value than on offer with goods and gift cards.”

So someone with a points balance of 300,000 is likely to be sitting on an asset worth between $1500 and $15,000, while anyone who has broken the one-million-point barrier effectively has between $5000 and $50,000.

Adele Eliseo says try to transfer points before you die. Picture: Dom Scopelliti

DEATH

Eliseo says if a frequent flyer program member dies, Qantas Frequent Flyer and Velocity Frequent Flyer “take very different approaches”.

“Qantas states that membership will terminate automatically when a member dies,” she says.

“Additionally, points that have been earned but not yet redeemed will be considered invalid from the member’s date of death – not the date that the death is notified to Qantas.

“Velocity takes a more flexible approach here, allowing executors or administrators of an estate to request a transfer of points to another Velocity account, or to redeem points associated with a deceased member’s Velocity account.”

If a loved one dies with Velocity points, try to transfer them relatively quickly because points expire after 24 months of account inactivity.

The Qantas point situation is much trickier. If a person dies suddenly their points will die with them, but a terminally ill person’s points can be transferred.

“Qantas Frequent Flyer allows points transfers to eligible family members, capped at 600,000 Qantas points per account, per year,” Eliseo says.

“As Qantas points are deemed invalid from a member’s date of death, they can be clawed back retrospectively by Qantas if a family member seeks to transfer or redeem points after the death of a loved one.”

DIVORCE

Adelta Legal director Mark Jappe says frequent flyer points are often overlooked when couples separate or divorce, but they are an asset that can be the subject of court orders or binding agreements.

“Unlike most other assets, frequent flyer points are usually precluded from being sold on the open market,” Jappe says.

“Accordingly, a court order or agreement will need to either assign a value to the points being kept by one member of the couple or direct the split of the couple’s frequent flyer points between them.”

Jape says it can be difficult for splitting couples to agree on the value of points because it depends on whether they are redeemed at rewards stores or used for flights.

“For this reason, it is generally preferred to agree on a split of the frequent flyer points between the parties,” she says.

“Most programs allow the transfer points between family members.”

If you die, your Qantas points die too, but Velocity is more flexible. Picture: NCA NewsWire

ILLNESS/INCAPACITY

Jappe says if a person loses the capacity to manage their own affairs through an illness or accident, their substitute decision maker – appointed under a power of attorney – can deal with their frequent flyer points.

“The obvious and easiest solution is to redeem points for gift vouchers or items from an online rewards store which are then used to benefit the person who has lost capacity,” he says.

“The substitute decision maker may prefer to transfer the points to another family member.” However, this must be done in the best interests of the person who lost capacity rather than benefiting themselves, Jappe says.

Eliseo says today there are many ways to use points “that don’t involve stepping on a plane”.