Current Trends - Airline Miles, Hotel Points & Your Estate Plan - Episode 262

Hey there, Legal Tea Listeners – This is your host, Jenny Rozelle. Welcome back for another episode. Episode 262 – today is a “current trends” topic where we talk about things going on currently that are relevant and pertinent to my estate and elder law world, and/or maybe things I’ve seen on the news or stumbled across on social media. Well today is … let’s say it like this: if you've ever spent way too much time comparing airline credit cards, figuring out whether you should transfer your Chase Ultimate Rewards points to Hyatt instead of United, or trying to squeeze every last penny of value out of your Marriott Bonvoy account, this episode is for you. Today we're talking about something that almost no one thinks about until it's too late: what happens to all of those airline miles, hotel points, and credit card rewards when someone dies?

Well the answer is my favorite lawyer answer: it depends. Depending on the program, those points may disappear, they may be transferred, or the company may have complete discretion over what happens. And if you're someone who has spent years accumulating miles or points, those rewards could represent a surprisingly valuable asset. So let's dive into the fascinating intersection of estate planning and these airlines miles, hotel points, and credit card rewards…

One of the biggest misconceptions people have is that airline miles and hotel points are just another asset like a bank account or an investment account. Legally speaking, they usually are not. When you sign up for one of these loyalty programs, you are agreeing to a contract. And buried somewhere in those dozens of pages of terms and conditions (that really no one reads) is language explaining that the miles or points generally belong to the program - not to you. What you actually own is a limited contractual right to redeem them according to the program's rules. That's an important distinction because it means these rewards do  not usually automatically become part of your estate in the same way your checking account or brokerage account does. Rather, most loyalty programs reserve the right to terminate an account upon the member's death, cancel accumulated rewards, or decide, in their sole discretion, whether they will allow a transfer to a surviving family member. In other words, these are not property rights in the traditional legal sense. They are contractual privileges. That make sense?

Now, before everyone starts panicking because they think their points are going to disappear tomorrow, here's the good news: what the legal documents say and what companies actually do are not always the same thing. This is one of those rare areas where the fine print often gives the company broad discretion, but customer service representatives sometimes exercise that discretion very generously. Policies have evolved over time, companies want to maintain goodwill with customers, and many recognize that refusing a grieving family member's reasonable request is not exactly a great business strategy. So while it is important to understand the official rules, it is equally important to understand that there is often room for compassion and flexibility.

That reminds me of an estate administration I handled several years ago. I was actually serving as Executor for a gentleman who had passed away, and his sister was the beneficiary of his estate. During the administration she mentioned, almost as an afterthought, "I think my brother had Delta SkyMiles because he traveled constantly for work." We didn't even know whether there was an account or how many miles he had accumulated, but I decided it could not hurt to ask. So I contacted Delta, explained the situation, provided the necessary documentation showing I was serving as Executor, and sure enough - he had accumulated a substantial number of SkyMiles over the years. Even more surprising, Delta agreed to transfer those miles to his sister. This was probably five or six years ago now, and I fully recognize that policies can change over time. But I've never forgotten that experience. Sometimes the written policy gives a company discretion, and that discretion works in your favor if you simply ask.

That story also highlights another practical lesson: your executor or trustee can only preserve assets they actually know exist. Unlike a brokerage statement that arrives every month or a bank account listed on a balance sheet, loyalty accounts often fly under the radar. Maybe the member signed up fifteen years ago, never received paper statements, and has everything tied to an email address no one else can access. If your family does not know those rewards accounts exist, they probably will not even think to ask. That is one of the many reasons I encourage clients to leave behind an organized inventory of digital accounts and online assets. I'm not necessarily talking about passwords (that's a separate conversation!) but at least make sure someone knows you have a Hilton Honors account, an American Airlines Advantage account, Marriott Bonvoy points, Southwest Rapid Rewards, or transferable credit card rewards. Otherwise, those rewards may simply disappear because no one ever knew to investigate.

I want to talk a bit specifically about airlines because each carrier approaches this issue a little differently. Most major U.S. airlines reserve broad discretion over what happens after a member dies. Some state that miles are non-transferable except as expressly permitted. Others specifically state that the account terminates upon death. But several programs also acknowledge that they may allow transfers under certain circumstances if appropriate documentation is provided. The key phrase you'll often see is "at our discretion." That's legal schmegal language meaning they do not have to approve a transfer, but they can if they choose to. For an executor, that means it is almost always worth contacting the airline's customer service or estate department before assuming those miles are gone forever.

Hotel rewards aren't all that different. Every loyalty program has its own playbook, and there really isn't a one-size-fits-all answer. Some programs have a fairly straightforward process for transferring points after a member dies, while others handle requests individually or reserve the right to make those decisions at their discretion. So if you're serving as an executor, don't leave those points on the table because you assumed they couldn't be transferred. Pick up the phone, explain the situation, provide whatever documentation they request, and see what they can do. It may not work every time, but it's almost always worth asking.

Then there are credit card rewards, which add another layer of complexity because the rewards are often tied to the credit card account itself. If someone has Chase Ultimate Rewards, American Express Membership Rewards, Capital One Miles, or Citi ThankYou Rewards, the issuer's account agreement governs what happens after death. In many cases, once the credit card account is closed, the rewards may eventually expire if they have not been redeemed or transferred. Some issuers allow an executor or authorized representative to redeem existing rewards or transfer them under certain circumstances. Others may permit a surviving joint account holder or authorized representative to use the rewards, depending on the account structure. The important takeaway is that time matters. Waiting six months or a year before looking into reward accounts may dramatically reduce the available options.

This also raises an interesting estate planning question: should someone intentionally use their points quite intentionally while they are living rather than accumulating them indefinitely? Estate planners spend a lot of time encouraging clients to enjoy what they have worked so hard to build. Airline miles and hotel points are actually a perfect example. Unlike cash, these rewards don't usually appreciate over time. In fact, many loyalty enthusiasts would argue they depreciate because airlines and hotels periodically increase the number of points required for the same flights or hotel stays. That is called a devaluation, and it happens more often than most people would like. So if you are sitting on a whole bunch of airline miles waiting for the perfect trip that never comes, maybe the better strategy is simply to book the vacation. Travel with your children. Take your grandchildren to Disney. Visit Europe. Use the rewards while you can actually enjoy them.

Another practical point involves documenting these accounts. If you are serving as Executor or Trustee, considering making a checklist that includes more than just banks and investment firms. Ask whether the deceased person traveled frequently. Look through email for loyalty program notifications. Search for airline apps on their phone if you have lawful access. Look for hotel confirmations. These small clues can uncover accounts containing hundreds of thousands of points that otherwise would have gone unnoticed. And because each program has its own procedures, begin those conversations early in the administration rather than waiting until everything else has been completed.

This discussion also fits into the broader topic of, what are called, digital assets. Not long ago, most assets generated paper records. Today, some of our most valuable assets exist only online. That could include airline rewards, cryptocurrency, PayPal balances, online business accounts, etc. Estate planning is not just about who gets the house anymore. It is about making sure your people know where to look and have the legal authority to access digital assets when appropriate. Many states - through the Revised Uniform Fiduciary Access to Digital Assets Act - have enacted laws that help fiduciaries access certain digital assets, but those laws generally work alongside the provider's own terms of service rather than replacing them. In other words, good planning still matters.

So let’s talk about some takeaways… First, do not assume airline miles, hotel points, and credit card rewards automatically transfer at death. Second, do not assume they are automatically lost either. Third, if you are administering an estate, ask the questions. Contact the airline, hotel, or credit card company, explain the situation, and find out what options exist under their current policies. Fourth, keep a record of your various loyalty programs so your executor knows they exist. And finally, remember that miles and points are meant to be used. While they can certainly have value after someone dies, they generally provide the greatest value when they're creating memories during life.

Alrighty guys, it is time to wrap this episode up! Next week, we’re back to the “celebrity estate planning” type of episode – and I don’t know if any of you caught this a few weeks ago, but a few weeks ago, I said that next week was on American fitness personality, Richard Simmons. But then the following week, I ended up doing Paul Allen. Well, that is a direct product of this being a one woman show over here. I think I forgot that I said that, carried on, and didn’t realize it until I had recorded and scheduled everything. Sorry about that! So, NEXT week, I promise I’m doing the estate of Richard Simmons, so until then, Legal Tea Listeners, be well and talk soon!

Sources:

Delta Air Lines, SkyMiles Membership Guide & Program Rules (transferability, member rights, and estate-related provisions).

American Airlines, AAdvantage® Terms and Conditions.

United Airlines, MileagePlus Program Rules.

Southwest Airlines, Rapid Rewards Terms & Conditions.

Marriott, Marriott Bonvoy Terms and Conditions (section addressing transfer upon death).

Hilton, Hilton Honors Terms and Conditions (death of a member and point transfer provisions).

Hyatt, World of Hyatt Terms & Conditions.

Chase, Ultimate Rewards Program Agreement.

American Express, Membership Rewards Terms and Conditions.

Capital One, Rewards Program Terms.