By Ella Richardson, Lawyer

Many Australians hold sizeable frequent flyer balances and unlike cash, these points do not accumulate in a bank account; they exist in a grey area, subject to the rules and regulations of individual loyalty programs. Points can decrease in value or expire over time which is why they should be factored into early property settlement discussions.

The value of points depends on how they are used and can differ between different reward currencies and programs. As an example, points redeemed poorly might be received with a value of less than $0.5c per point. Points redeemed strategically, might result in a value of $5.00 or more per point, in the hands of the recipient.

The Family Law Act 1975 and case law address the treatment of real property, shares and superannuation in a property settlement. However, while points are considered an asset, assigning them a value isn’t exactly straightforward. As points rarely have a set dollar-per-point conversion, parties are often faced with the challenging task in a property settlement, of trying to prove what they assert the estimated cash value of their points are. In the case of Herouz & Herouz [2021] FamCA the Court did not allow frequent flyer points to be included in the asset pool as the parties did not provide any expert evidence that enabled the Court to decide of the monetary value of the frequent flyer points. In Sebastian & Sebastian (No 5) [2013] FamCA however, the Court did allow the Qantas frequent flyer points to be included in the asset pool. The husband held 3,470,604 points and the wife held 925,000. The wife sought Orders for the husband to transfer to her 2,000,000 points. Ultimately, the Court did not place a monetary value on the points, however, it did find it was just and equitable to make Orders for the husband to transfer to the wife 1,000,000 frequent flyer points.

What about when someone dies? Frequent flyer points don’t transfer automatically to a beneficiary when someone passes away. Whilst certain loyalty programs allow families to claim them, others don’t. Even when point 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 even think about them let alone use them. Qantas Frequent Flyer allows for unexpired Qantas points to be transferred to an eligible family member. Velocity Frequent Flyer permits the redemption or transfer of points up to 12 months after a member’s passing. It is important to note that many loyalty programs take steps to cancel points as soon an account holder’s death is recorded.

The takeaway

Points should be factored into discussions early, not treated as an afterthought. Accurate record keeping and documentation of points is key, and remember, unlike other assets, points don’t gain value over time – they are vulnerable to devaluation, expiry, and policy changes.