Frequent flyer miles can be very beneficial if you love to vacation or need to regularly travel for work. If you have spent countless dollars building up your frequent flyer miles, you would probably want unused miles to become a part of your estate in the event of your death. However, there are many obstacles that need to be considered before your heirs and beneficiaries can take your miles outright.
Frequent Flyer Transfer Restrictions
The most extreme and most common restriction airlines have on the transferability of your frequent flyer miles is an all out prohibition. Most airlines will not allow a transfer of frequent flyer miles from a deceased individual to a beneficiary at all. Those airlines specifically state in their frequent flyer Terms and Conditions that the frequent flyer miles are property of the airline and that the holder has no right to transfer miles without the airline’s express written consent. In fact, more and more airlines are starting to prohibit unused frequent flyer miles as gifts in an estate. For example, in March 2013, Delta adopted this “use it or lose it” approach with its SkyMiles, prohibiting any transfers upon the holder’s death. If your airline has this restriction in its Terms and Conditions, you will be unable to transfer your miles upon your death.
One way around this restriction is to transfer the miles when you are living. Almost every airline allows a miles transfer from one living frequent flyer to another. If you become sick or know that you will not be flying as often as you used to, you can transfer the miles to a loved one while you are living. However, in the case where you may become sick, disabled, or incompetent, it is important that your Durable Power of Attorney includes language that allows your designated agent to transfer your miles on your behalf. This will eliminate any ambiguity if the airline tries to prevent a transfer initiated by your appointed agent. Also keep in mind that most transfers typically come with a transfer fee. If you are transferring a lot of miles, you should compute how much the airline ticket would cost if you purchased the ticket without using miles. Sometimes the transfer fee can cost more than purchasing the ticket without using miles.
For airlines that allow a transfer of your miles upon your death, your Executor will need to take certain steps in order to obtain those miles. These airlines will also typically charge a fee to complete the transfer. With that being said, you should always leave your usernames, passwords, and account numbers with your appointed Executor or as an attachment to your will. If your Executor has no way of knowing about or accessing your frequent flyer miles, those miles will expire after a certain amount of time.
Communicating Your Intentions
You could name specific beneficiaries of your frequent flyer miles in your will. However, this specific bequest could be superseded by your airline’s transfer restrictions. If you are unsure as to how your airline’s Terms and Conditions might change in the future, you can still provide for your frequent flyer miles in your will, even if they ultimately cannot be transferred.
In conclusion, if you are a frequent flyer member, be sure to check your airline’s Terms and Conditions to see what transfer restrictions apply. The same goes for hotel rewards points and credit card rewards points. Hotels and credit cards have recently been following the airlines’ lead by imposing transfer restrictions upon the holder’s death.
Bill Hesch is a CPA, PFS (Personal Financial Specialist), and an attorney licensed in Ohio and Kentucky who helps clients with their financial and estate planning. He also practices elder law planning, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky. Review your estate plan and contact Bill Hesch if you have any questions about implementing your frequent flyer miles.