What happens to your frequent flyer points in a divorce?

A friend once told me how she nearly overlooked a valuable asset in her divorce. She and her partner had stockpiled over one million Qantas Points, with dreams of using them for a first class trip to Europe.

But when she mentioned this in passing to her lawyer, the response was immediate: “Are these accounted for in the list of shared assets?” They weren’t.

It’s easier than ever to earn frequent flyer points, but they remain widely misunderstood, especially when divvying up assets or someone’s estate.Credit: Michel O'Sullivan

It’s easier than ever to earn frequent flyer points, but they remain widely misunderstood. Too often, we lump them in with the likes of coffee loyalty cards or fuel discount dockets, ignoring their potential to deliver far greater value.

Many Australians hold sizeable frequent flyer balances, enough to unlock premium flights, upgrades, or even a stash of gift cards. But during a divorce or when handling an estate, without the necessary safeguards, there’s a risk of them quietly slipping away.

Unlike cash, frequent flyer points don’t accumulate in a bank account. They exist in a grey area, subject to the rules and whims of individual loyalty programs. Over time, there is a risk that points could devalue or expire.

The value of points depends on how they are used, and it can vary widely between different rewards currencies. Redeemed poorly, it’s possible to fetch a value of less than 0.5¢ per point on gift cards or merchandise. But for premium flights? That value can jump to 5¢ or even more per point.

Consider this: while one million points might buy around $5000 in gift cards, they could also unlock first class flight redemptions worth $50,000, for those who can find them. That’s a tenfold increase in value.

What happens in a divorce?

There are clear rules around the treatment of property, shares, and superannuation in a financial settlement. However, frequent flyer points are another story. While points are considered an asset, assigning them a value isn’t entirely straightforward.

Both Qantas Frequent Flyer and Velocity permit the transfer of points to nominated family members, which can help when splitting up the asset pool. But if one partner holds all the household’s points, or if balances are spread across multiple programs, the process to divvy them up can prove more challenging.

The takeaway? Frequent flyer points should be factored into discussions early, not treated as an afterthought.

What happens when someone dies?

Frequent flyer points don’t transfer automatically to a beneficiary when a loved one passes away. Some loyalty programs allow families to claim them, while others take a less compassionate approach.

Even when points transfers are allowed, an executor or administrator will usually need to be involved. Without clear instructions or documentation, points can quietly expire before anyone has the chance to use them.

For many years, Qantas Frequent Flyer took steps to claw back points upon notification of a member’s passing. That changed in 2023 when the airline softened its stance. Within 12 months of a loved one’s death, it’s now possible for unexpired Qantas points to be transferred across to an eligible family member.

Frequent flyer points don’t sit in a bank account, but they can still hold significant worth in a divorce or estate settlement.

Velocity Frequent Flyer takes a similar approach, allowing the redemption or transfer of points up to 12 months after a member’s passing. But not all loyalty programs are as flexible. Many take steps to cancel points as soon an account holder’s death is recorded.

Since Qantas boasts over 17 million Frequent Flyer members, and Velocity has more than 12 million, it’s likely that many Australians hold active points balances.

Which leads to an important question: how many of us factor frequent flyer points into our estate planning? And when we don’t, how often do points go unclaimed?

How to protect your frequent flyer points

Know the expiry rules. Qantas points expire after 18 months of inactivity, while Velocity points expire after 24 months of inactivity. Other programs have fixed expiry dates. Always check the individual program terms.

Diversify your points. Holding all your points in one program is risky, especially if rules change. Spreading points earn across multiple programs or targeting flexible rewards schemes can unlock better redemption opportunities.

Keep track of balances. Like savings or shares, points balances should be documented, valued, and access details shared with next of kin. If no one knows they exist, they won’t be claimed.

Use them or lose them. Unlike other assets, points don’t gain value when hoarded over time. They are vulnerable to devaluation, expiry, and policy changes. This can sometimes happen without notice.

Frequent flyer points don’t sit in a bank account, but they can still hold significant worth. In a divorce or estate settlement, neglecting them could prove a costly mistake.

Adele Eliseo is a leading expert in frequent flyer and loyalty programs, as well as the founder The Champagne Mile and Pointify. Follow Adele on LinkedIn.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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