Up-in-the-Air Estate Planning: Frequent Flyer Miles

There’s more to a clients’ material wealth than just cash. Of course, we all know and plan for clients’ stocks, bonds, and real property. But one of the often overlooked assets is frequent flyer miles.

As you know, airlines and affinity credit cards have been battling each other for years to gain the loyalty of customers and to reward customers with frequent flyer miles.

So, your clients who are or have been frequent flyers are sitting on hundreds of thousands of miles that are good for many round-trip tickets to faraway destinations and other perks. In fact, even clients who have never strayed far from home may have hundreds of thousands of miles from credit card and other programs. Many of these people have so many miles they don’t know what to do with them.

Here’s a way to offer more value to your clients: Look into the fine print of programs used most frequently by your clients. You’ll likely find ways to pass the perks on, either now or after the client passes away. A bit of planning could make the clients’ loved ones and the client pretty happy. After all, a nice trip usually results not only in a positive experience but a lot of memories too.

Some miles programs are pretty liberal when it comes to using miles for other people. The Southwest Airlines Rapid Rewards program, for example, lets people redeem a ticket and book the trip in someone else’s name. So maybe the grandkids can fly to visit your client after all.

Other programs allow anyone who has the account holder’s username and password to book a ticket. If a program has this rule it’s a good idea for the client to make a note of login information so others can access it. No sense in those miles being wasted!

Another idea is to check to see if family Members can be added to the credit card account. This way, as a secondary cardholder, others can access benefits such as flyer miles. (Maybe the account holder gets a relative a card, makes a note in their Will, then, just keeps the card in a safe place. Of course, the client needs to be careful since they may be responsible for any charges the relative makes on the card.)

Some airlines such as American Airlines allow the transfer of miles to the account of an heir if a Will or an Estate Plan mentions the gift. Continental has the same provision. United Airlines Mileage Plus Program says that mileage isn’t transferable upon death but a watchdog group says that United miles can actually go to a beneficiary for a fee. Cathay Pacific allows transfer of miles in blocks, for a fee.

Most of us probably don’t even think of frequent flyer miles as valuable assets. But, when you think about it, they really are. 250,000 miles can get 10 roundtrip tickets anywhere in the U.S. on most airlines. That would be worth $3,500 if the average fare was $350. However, the miles may be worth even more if used for business or first class tickets.

Doing a bit of planning on the transfer of miles is pretty easy and it can come as a pleasant surprise to clients and their loved ones. So maybe your client’s son-in-law can make it to Graceland after all.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
www.aaepa.com