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Will Rewards Points Die With You?

image showing a last will and testamentWhen you’re on your deathbed, you probably won’t be thinking about how many unspent airline miles you have. But perhaps you should.

According to a new report by Colloquy, an Ohio-based loyalty marketing consulting firm, memberships in loyalty programs have increased more than 26% in just the past two years to 2.65 billion, or more than eight programs for every man, woman and child in the U.S. That translates into almost $50 billion in rewards in 2011.

“As a result, many consumers consider loyalty points like investment assets, which raises the issue of what happens to those points after the member’s death,” according to the report “Inherit the Windfall: Passing on Loyalty Points.”

Jay Marsden, an estate planning and elder law attorney in Holliston, Mass., says this is an issue particularly for people who travel a lot on business and have accumulated hundreds of thousands of miles. Sometimes the issue even goes to probate.

But most of us have no idea what happens to our rewards after death, nor have we ever thought about it.

Colloquy found that only 12% of people they surveyed are aware of their program’s policies regarding the transfer of rewards upon death, and 76% of program members have never considered what happens.

What may be even worse, the Colloquy report found, is that getting that information from your credit card company, hotel or airline may be difficult to obtain.

Not all companies’ policies are accessible online, for one thing, which means consumers have to call customer service centers. But Colloquy found that a lot of the answers they received from customer service reps were often inconsistent and/or incomplete.

The policies Colloquy obtained varied widely. Some programs allow customers to transfer points while others don’t. Some impose a fee, while others will waive charges partially or entirely.

In some programs, the transfer is restricted to a spouse, residential partner or joint account holder. In other cases, redemption of rewards points is permitted only within a certain time after the account holder’s death but do not allow a transfer to an heir.

Some companies do have clear policies regarding this issue.

For example, US Airways publishes its policies online. Beneficiaries have a year after the customer dies to transfer all outstanding mileage to the estate. But you must produce appropriate documentation, such as a death certificate and proof of beneficiary. Transfer of the points is free.

United’s Mileage Plus program also allows the transfer of points after death but charges a $150 fee.

American Express allows Membership Rewards points to be left in a will, and the transfer of the points is free. However, the beneficiary must be the executor of the estate, and he or she must also be a program member.

Likewise, Starwood’s Preferred Guest program allows unredeemed Starpoints to be transferred to a family member or friend for free, after appropriate documentation, but only if the person is also an active member.

Some programs that don’t allow the transfer of rewards after death include Delta SkyMiles, Southwest Airlines Rapid Rewards and the Hilton HHonors program.

The Colloquy report notes that some survivors try to “work around” customer service in order to avoid fees by accessing accounts with the dead person’s passwords or other “surreptitious” methods. It urges rewards programs to be more consumer-friendly in allowing rewards to be transferred after the customer’s death.

The report doesn’t estimate how many points and rewards are lost when customers die and the points are not transferred to a beneficiary or estate.

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