January 30, 2013
Authored by: Tiffany McKenzie and Cynthia D. Kennedy
When someone passes away, usually their next of kin, agent or fiduciary will begin to compile a list of the decedent’s assets. Rarely will such a list include the decedent’s frequent flyer miles. However, depending upon how many miles have been accrued during the decedent’s life, frequent flyer miles can be worth hundreds, maybe even thousands, of dollars. In such cases, heirs or beneficiaries of the decedent’s estate may wish to benefit from the value the decedent has amassed in frequent flyer miles.
Most airlines allow for mileage transfer among the living, but it is usually an expensive task to accomplish, often accompanied by fees and yearly limits. The transferability of frequent flyer miles upon death is no more simple. Susan Stellin, the author of a New York Times article entitled “The Afterlife of Your Frequent Flyer Miles,” stated “I asked six airlines if they allow transfers of frequent flyer miles after a member’s death and got a straight answer from only four.”
Most airline loyalty program policies claim that points accumulated are the property of the issuing company, giving them complete discretion as to how they are handled in the case of death. For example, United’s Mileage Plus policy states: “[a]ccrued mileage and certificates do not constitute property of the member. Neither accrued mileage nor certificates are transferable (i) upon death, (ii) as part of a domestic relations matter, or (iii) otherwise by operation of law.” Southwest Airlines has a strict policy that they do not transfer RapidRewards points once a member dies.
Such policy provisions, therefore, appear to provide that miles cannot be bequeathed to, or inherited from, another person. Nevertheless, the formal policy found in an airline’s terms and conditions can vary considerably from what the airline’s customer service center will offer. Policies differ from practices, so begin by calling the program’s service center to determine whether the miles can in fact be transferred or inherited.
For example, the terms and conditions of American’s Aadvantage program and Delta’s SkyMiles program provide that accrued mileage and award certificates are not transferrable at death. Both airlines’ customer service departments, however, provide exception procedures. According to its website, American Airlines has the discretion to credit accrued mileage to persons specifically identified in court-approved wills upon receipt of documentation satisfactory to American Airlines and upon payment of any applicable fees. Delta also allows for the Administrator or Executor of the Member’s Estate to request, via affidavit accompanied by a death certificate, to reinstate and transfer the Miles from the deceased Member’s account to one or more members’ accounts.
Getting Around Transferring Miles
In most cases, it is not the miles, but the award tickets the miles can purchase, that are important. Fortunately, it is not difficult to have an award ticket issued in the name of a friend or family member. Susan Stellin also suggests that “[o]ne way you can make things easier on your heirs is to leave a list of your frequent flier account numbers and passwords.” Doing this allows your loved ones to use your miles to issue tickets to themselves without having the hassle of fees and paperwork.
Updating Your Will
Last, do not leave it to the airlines’ “sole discretion” to honor your wishes. People who have significant frequent flier miles should consider designating who gets their miles in a Will. Questions have been raised concerning the taxability of frequent flyer miles, but according to Announcement 2002-18, the IRS has not pursued a tax enforcement program with respect to promotional benefits such a frequent flyer miles. Therefore, there is likely no negative consequence to adding frequent flyer miles to your estate plan.