Don’t Let Your Loyalty Points Die With You: Invisible Estate
Airline miles, hotel points, credit card rewards, gift cards, and travel credits can quietly accumulate for years. A frequent traveler may have enough miles for an international flight, while a credit card account could hold hundreds or even thousands of dollars in unused rewards. Yet these assets often receive little attention when people create or update their estate plans. Some refer to them as part of an invisible estate.
That oversight can prove costly. Unlike money sitting in a bank account, loyalty rewards generally operate according to contracts established by the companies that issue them. When an account holder dies, those rules may determine whether the rewards transfer, convert to cash, or disappear entirely.
For California families, an effective estate plan should account for this increasingly valuable part of our digital lives.
Rewards Points Aren’t the Same as Money in the Bank: Invisible Estate
A rewards balance may look remarkably similar to a financial account when you open an app and see thousands of points waiting for you. Legally, however, the two can work very differently.
Money in a bank account represents property you own. In contrast, loyalty programs commonly treat points and miles as contractual benefits that members can use only according to the program’s terms. Those terms may give the company considerable control over transfers, redemptions, expiration, and what happens after a member dies.
Consequently, accumulating 200,000 airline miles doesn’t necessarily mean you own an asset that you can simply leave to a child in your will. The program agreement may limit what you—or your heirs—can do with those miles.
What Happens to Loyalty Points When You Die?
Unfortunately, there isn’t one rule that applies to every rewards program. Each company can establish its own policies, and those policies can differ dramatically.
Some programs provide for forfeiture when the member dies. Others may allow an executor or another authorized person to request a transfer. Still others require extensive documentation before deciding whether remaining rewards can pass to someone else. The original research supplied for this article found examples ranging from strict forfeiture to discretionary transfers and automatic conversion of remaining rewards to cash value.
Therefore, families shouldn’t assume that because one airline, hotel chain, or credit card company allowed a transfer, another company will do the same.
Timing can also matter. Once a credit card issuer learns that a cardholder has died, it may restrict or close the account. Depending on the program rules, unused rewards could potentially disappear before the executor even realizes they exist.
A Will Cannot Necessarily Override the Program Rules
Suppose your will says, “I leave all of my airline miles to my daughter.” That instruction certainly communicates what you want, but it doesn’t necessarily require the airline to transfer the miles.
The reason comes back to the contractual nature of loyalty programs. An estate plan generally cannot give your beneficiary rights that you didn’t possess under the account agreement.
California does provide a legal framework for fiduciary access to digital assets. The state’s Revised Uniform Fiduciary Access to Digital Assets Act addresses circumstances in which personal representatives, trustees, and other fiduciaries can obtain access to certain digital assets and records. However, the law also recognizes applicable terms-of-service agreements and doesn’t automatically expand the underlying rights the deceased person had.
In practical terms, giving your executor authority to identify and manage digital accounts can help tremendously, but it doesn’t force a rewards company to allow an otherwise prohibited transfer.
Your “Invisible Estate” May Be Worth More Than You Think
Ignoring rewards might not matter much if you have 300 points sitting in an account you haven’t used for years. However, some households accumulate substantial value across numerous programs.
The original research for this article found billions of dollars associated with credit card, hotel, and airline loyalty programs. It also cited research estimating that more than a quarter of loyalty points go unspent, while billions of dollars in potential value disappear through expiration and other forms of “breakage.”
Individually, the balances can add up as well. Consider everything a household might have accumulated:
- Airline frequent-flyer miles
- Hotel loyalty points
- Credit card rewards or cash back
- Travel credits and vouchers
- Retail loyalty rewards
- Gift cards and store credits
Once you start looking, your invisible estate may become surprisingly visible.
Create an Inventory Before Anyone Needs It
The first step doesn’t require changing your trust or rewriting your will. Simply identify what you have.
Create an inventory of significant rewards programs, including the company, account information, approximate balance, and any expiration provisions you know about. Then review that inventory periodically because programs, balances, and policies can change.
However, avoid putting passwords or other sensitive credentials directly into a will. A will may eventually become part of a public probate proceeding, making it an inappropriate place for confidential login information. Instead, consider secure password-management tools or another protected method that allows an authorized person to locate the information when necessary.
Find Out Which Accounts Deserve Immediate Attention
Not every rewards account requires the same level of planning. A nearly empty retail account probably doesn’t deserve the attention that 500,000 airline miles or a substantial credit card rewards balance does.
For high-value accounts, review the program’s current rules. Determine whether points expire at death, whether the company permits transfers, and what documentation an executor may need to provide.
Additionally, make sure the person responsible for your estate knows that these accounts exist. The original article makes an important point: an executor cannot administer an account they never discover.
That principle extends well beyond loyalty points. Today’s estate planning increasingly requires families to think about assets and records that may exist only online.
Incorporate Digital Assets Into Your California Estate Plan
A comprehensive estate plan should reflect the way you actually own and manage assets today. That increasingly means considering digital accounts alongside homes, bank accounts, investments, and personal property.
California law allows people to provide certain directions concerning disclosure of digital assets to fiduciaries. Depending on the circumstances, online tools offered by an account provider can also affect those directions. Therefore, discussing digital assets with your estate planning attorney can help ensure that your documents provide appropriate authority while working within applicable program rules.
Most importantly, don’t wait for your executor to discover this part of your financial life after you’re gone. Identifying valuable accounts now gives your family a much better opportunity to preserve whatever value the programs allow them to retain.
Your airline miles may never carry the same legal status as money in a savings account. Nevertheless, after years of travel and spending, they may represent significant value. Don’t let that value remain invisible.
About Skvarna Law Firm in Glendora and Upland, California
Skvarna Law Firm operates from Glendora and Upland, California, serving clients throughout San Bernardino County, Los Angeles County, Orange County, and Riverside County, including Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco, and Mira Loma. The firm assists clients with estate planning, trusts, wills, probate, and elder law, helping individuals and families plan for the future and navigate important legal decisions.
