Splitting Aeroplan, Air Miles, and Credit Card Reward Points in Ontario

During a marriage, couples often put all their joint expenses on a single premium credit card to maximize travel rewards. By the time separation occurs, it is entirely possible to have accumulated hundreds of thousands of Aeroplan or Air Miles points. Many people mistakenly believe these points belong solely to the person whose name is on the loyalty account. However, in Ontario, travel points and credit card rewards earned during the marriage hold clear financial value and must be included in your Net Family Property (NFP) equalization. ⚠

Ignoring reward points in a divorce settlement is a common and costly mistake. A massive Aeroplan balance could easily be worth thousands of dollars in flights or merchandise. When dividing this asset, you generally have two choices: physically splitting the points into two separate accounts, or allowing one spouse to keep all the points while giving the other spouse cash equivalent. Because airlines and banks have strict corporate policies, you must ensure your family lawyer uses the correct legal terminology to force the loyalty program to execute the transfer. 📝

Step-by-Step Process for Dividing Travel Points

Splitting reward points requires direct communication with the loyalty programs. Whether you are dealing with Aeroplan, Air Miles, or an RBC Avion account, the administrative process is relatively uniform across Canada. Following these steps protects your hard-earned travel rewards.

Step 1: Audit the Points Balance at Separation

The first step is total financial transparency. You must log into all loyalty and credit card accounts and download the official statements showing the exact points balance on the Date of Separation. Any points earned after the separation date belong to the account holder alone, so drawing a clear line in the sand is legally required. 🔍

Step 2: Determine the Valuation Method

If you decide to offset the points (meaning one person keeps them and pays cash), you must determine their monetary value. While airlines claim points have no cash value, family courts in Ontario generally accept a standard valuation of 1 to 2 cents per point, depending on the program. Your family lawyer can help you negotiate a fair cash-equivalent value for the equalization payment. 💰

Step 3: Draft Specific Clauses in the Separation Agreement

If you prefer to physically split the points, your lawyer must include very specific language in your final separation agreement. The clause must explicitly state the exact number of points to be transferred, the specific loyalty program involved, and the account numbers. Vague wording will be rejected by the airline’s legal department. 📄

Step 4: Negotiate a Cash Offset Rather Than Direct Transfer

While some couples attempt to submit their separation agreement directly to a loyalty program to split the points, this is rarely recommended. Because airline programs charge standard transfer fees and major credit card programs prohibit direct transfers, family law professionals in Ontario strongly recommend using a cash offset. This keeps the points with the primary account holder and avoids unnecessary transaction fees. 🏢

Step 5: Decide Between Offsetting or Paying High Transfer Fees

Direct point transfers can be exceptionally costly. For example, Aeroplan charges a standard transfer fee of $0.02 per point plus applicable taxes, meaning transferring 200,000 points can cost upwards of $4,000 CAD. Furthermore, many bank-specific programs (like Amex Membership Rewards or RBC Avion) completely prohibit transferring points to a third-party account. Because of these high fees and corporate restrictions, the standard practice in Ontario is to offset the cash-equivalent value of the points against other family assets. 💸

How Much Does it Cost in Ontario?

Dividing points is a relatively inexpensive administrative task, provided your separation agreement is properly drafted. The primary costs involve the loyalty programs’ flat fees and your legal representation.

• Direct Point Transfer Costs: Rather than offering a discounted rate for divorce, programs like Aeroplan charge their standard fee of $0.02 per point. For a substantial balance, this cost can quickly exceed $2,000 CAD.
• Bank Program Restrictions: Most bank-specific reward programs (e.g., RBC Avion, Amex) prohibit direct transfers entirely, meaning there is no direct cost, as you must use an offset instead.
• Valuation Expert: If you have an exceptionally complex rewards portfolio (millions of points across multiple global airlines), hiring an actuary or valuator might cost $500 to $1,500 CAD.
• Lawyer Fees: Having a lawyer draft the correct offset or transfer clauses is part of your standard separation agreement costs, typically billed at $400 to $800 CAD per hour.

How Long Does the Process Take?

The time it takes to divide travel points depends entirely on the speed of the airline’s customer service department once your legal paperwork is finalized.

Gathering the statements and negotiating the split happens during the standard separation agreement process, which can take a few months. If you choose to proceed with a direct transfer and pay the loyalty program’s fees, the actual transfer of points into the ex-spouse’s account typically takes 3 to 6 weeks. However, if you choose the standard family law route of an offset, the equalization payment is handled instantly upon signing the separation agreement and transferring the offset funds. It is crucial not to close the primary credit cards attached to the account until the points have successfully settled in the new account, or they could be permanently lost. ⏳

Frequently Asked Questions (FAQ)

Author: lawyerinfo.ca