Guest Column: After death, what happens to unused rewards points?

When a loved one dies, families understandably focus first on funeral arrangements, bank accounts, insurance, taxes and the many immediate tasks that follow. Reward points from credit cards, airlines and hotels may not come to mind right away. Yet those accounts can hold meaningful value.

Reward points usually do not pass like money in a bank account or stock in an investment account. Most loyalty programs state in their terms that points, miles and rewards are contractual benefits rather than property owned by the member. As a result, a will alone may not be enough to transfer them. The controlling rules are typically the current terms of the credit card issuer, airline or hotel program.

That does not mean the points are always lost. Many programs provide a process for a personal representative, executor, surviving spouse or other authorized person to request a transfer, redemption, account credit or other available option. Other programs are more restrictive and may close the account and forfeit the balance once they are notified of the death. The practical lesson is simple: Act promptly, read the program’s rules and ask before assuming the rewards have no value.

Start with an inventory
The person settling the estate should begin by identifying all rewards accounts held by the deceased. Helpful sources include credit card statements, email confirmations, airline and hotel apps, old travel itineraries, physical membership cards, password managers, and tax or business-expense records. A frequent traveler may have accounts with several airlines and hotel brands, as well as rewards tied to multiple credit cards.

Once the accounts are identified, the authorized person should gather basic documentation. Programs commonly request a death certificate; proof of legal authority such as letters testamentary or letters of administration; a copy of a will or other estate document, if applicable; the deceased member’s account number and the receiving member’s account information if a transfer is allowed. Some programs require certified documents; others accept ordinary copies. Because deadlines may apply, this should be handled early in the estate administration process.

It is also important to avoid using login credentials in a way that violates a program’s terms of service. Even if family members have access to passwords, rewards programs may require requests to be made by a legally authorized representative. Taking the official route may take longer, but it reduces the risk of account closure, denied transfers or disputes among beneficiaries.

Credit card rewards
Credit card rewards are often the most flexible because some issuers permit points to be redeemed for a statement credit, cash, gift cards or travel before the account is fully closed. The executor or personal representative should contact the issuer’s estate department and specifically ask whether unused rewards remain and whether they can be redeemed, transferred or converted to a credit.

Issuers handle this differently. Some may allow a one-time redemption by the estate representative. Others may automatically apply the value as a credit against an outstanding balance and send any remaining amount to the estate. Still others may forfeit rewards when the account is closed. For that reason, family members should not close a credit card account until they have asked about unused rewards and confirmed the available options in writing.

Airline mileage plans
Airline programs tend to be more restrictive. Many airline loyalty terms state that miles are not transferable at death and may be forfeited when the account is closed. Even so, some airlines may consider a transfer or redemption request as a matter of discretion, particularly when a personal representative provides the requested documentation. Others have published processes for a one-time transfer, while some do not permit transfers at all.

Those settling an estate should check the airline’s current policy before contacting customer service. They should ask whether miles may be transferred to a named beneficiary, surviving spouse, family member or authorized person; whether a fee applies; whether there is a deadline; and whether existing award reservations can still be honored. If the answer is no, the family may still make a courteous written request, but expectations should be realistic.

Hotel loyalty programs
Hotel loyalty programs are often more accommodating. Some allow points to be transferred to a surviving spouse, legal heir or other existing member, provided the request is made within a specified time and supported by documentation. Program rules vary. Some require a request within a year of death, while others allow a one-time transfer to a spouse or person named in estate documents. Elite status, free-night certificates, lifetime status and other benefits may not transfer, even when points do.

The receiving person usually must have an existing loyalty account before the transfer can be completed. Families should be prepared to provide the deceased member’s name and account number, the receiving member’s account number, a death certificate and proof of authority or heirship. Sensitive identification numbers should be redacted when documents are submitted through a program’s secure portal.

The best way to preserve rewards is to plan ahead. Account holders should keep an updated list of credit card, airline and hotel loyalty accounts, including account numbers and instructions on where credentials are stored. They should consider whether a spouse or trusted family member can be added to household pooling, family sharing or authorized-user arrangements where permitted. They may also mention significant rewards balances in estate-planning documents, recognizing that the program’s rules will still control.

For loved ones settling an estate, the key is to act before accounts are closed or points expire. With prompt attention, rewards that might otherwise be overlooked may help pay for travel, provide a statement credit or preserve value for the family.

Ms. Marcin is partner at Rivkin Radler LLC, where she concentrates in trusts, estates and tax law. She can be reached at [email protected] or 516-357-3342.