Assets at Death Include More Than Money

When a colleague of mine suddenly and unexpectedly passed away recently, his estate included assets normally seen in such situations: mutual funds, retirement accounts, life insurance proceeds and real property. As wealth advisors, we expect to encounter assets of this type in the estate planning process and spend a lot of time and energy preparing for their eventual disposition. In fact, arranging for their transfer to a surviving spouse, or to the next generation, is a vitally important part of what we do.

My colleague’s unfortunate passing, of course, left an indelible mark on his family. Perhaps not surprisingly, it also prompted many financial and estate-related questions. One item his family inquired about was the unused frequent travel benefits he had accrued during his many years of intensive travel for the CPA firm at which he worked. Before he died, he had told his children and wife that he wanted them to use those benefits.

It turns out that my colleague had passed away with about 2 million miles in his frequent flier account with one airline, and about 1 million additional miles with another carrier. Not to mention the benefits he had accumulated through hotel rewards programs during the many nights he spent away from home.

After consulting various specialists, both in my professional circle and in the legal community, I was shocked to learn it’s a commonly held belief that, upon death, such benefits are not transferable. That belief, as it turns out, is at a minimum only partially, but also sometimes, true. Confused yet? Let’s explore.

Estate planning discussions cover the disposition of all assets to which an investor or client has access. Certainly an asset can include benefits accrued from substantial travel. When I asked colleagues and investors whether or not they have considered travel benefits in constructing an appropriate estate plan, the response I most frequently receive is something similar to, “Wow. I’ve never given that any thought.”

I thought it might be instructive to describe what happened in my colleague’s case, and the process I went through in dealing with travel benefits.

On the surviving spouse’s request, I contacted the airline directly. I then passed the results of my general inquiry on to her. She was easily able to administratively move her deceased husband’s miles to her own account. She simply completed a form, provided a death certificate and paid a modest administrative fee.

During this process I also learned each carrier and travel partner’s process is different, and sometimes murky. It appears some carriers will continue to reject any request for a transfer of miles. Transfer rules and program benefits can vary widely by provider, and change periodically. Many airlines allow miles or points to transfer to any beneficiary who can provide proof, while others severely limit who can receive them. Some airlines allow miles or points to transfer to only one beneficiary while others will let them be divided among two or more people.

My point is that it’s important to at least ask the question of the travel provider, because it might very well result in a substantial, valuable benefit for surviving family members. Some additional elements regarding travel benefits for you, and your wealth advisor, to consider are:

  • Always consult legal counsel, because their perspective is important. It may be prudent to suggest that investors include a written reference to this asset in their estate-planning documents and describe how they would want to handle the distribution of benefits (should the travel provider’s program permit it). That may enable the personal representative of the estate to pass along the benefits to others.
  • An airline or hotel’s formal policy, as stated in their terms and conditions, may indicate that frequent flier miles cannot be bequeathed through a will. I did find that when calling the customer service center, you may discover accrued travel benefits can be transferred. It is fair to say that these requests are often processed on a case-by-case basis.
  • Write down frequent-flier account numbers and passwords, and inform possible beneficiaries about the number of miles in each.

In conclusion, miles and points, which could be considered a form of currency, can be a valuable asset to surviving relatives or other beneficiaries.

Don’t ignore an asset such as travel benefits — otherwise they may go to waste.

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2015, The BAM ALLIANCE

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