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Bequeathing frequent flier miles in your will

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Cashing In
Cashing In columnist Cathleen McCarthy
Cathleen McCarthy is a journalist whose articles on travel, commerce and consumer topics have appeared in dozens of publications. She writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com

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Question for the CreditCards.com expert Dear Cashing In,
I've been diagnosed with terminal cancer and my time is short. I've been everywhere, done everything and still have a lot of miles piled up from a lot of airlines. Can I bequeath my air miles to my children? Can I just do it through my will or do I have to fill out any more damn airline paperwork?
-- Dying with Miles

Answer for the CreditCards.com expert Dear Dying,
Sorry to hear you're going through this, but it sounds like you've led a full life and have time to put everything in order -- including the sticky wicket of your travel rewards. If you have a lot of frequent flier miles accumulated, you're sitting on free travel your loved ones might not be able to afford on their own. So it makes sense that the burden of following up will fall to them.

A little good news: It doesn't look like you'll have to fill out any more airline forms. As long as you leave clear instructions in your will as to who gets the miles, making sure to specify airlines, those who inherit them should be able to use that to initiate the transfer.

Some estimate that 25 percent to 30 percent of frequent flier miles expire when the holder dies. That probably has to do with lack of written evidence for bequeathing miles, but also confusion about how to redeem them. Some airlines state on their websites that you can not transfer miles after death when, in fact, you can.

American Airlines, for example, states in its terms and conditions: "Except as otherwise explained below, mileage credit is not transferable and may not be combined among AAdvantage members, their estates, successors and assigns. Accrued mileage credit and award tickets do not constitute property of the member. Neither accrued mileage, nor award tickets, nor upgrades are transferable by the member (i) upon death, (ii) as part of a domestic relations matter, or (iii) otherwise by operation of law."

Sounds like a no-go, until you get to this line: "However, American Airlines, in its sole discretion, may credit accrued mileage to persons specifically identified in court approved divorce decrees and wills upon receipt of documentation satisfactory to American Airlines and upon payment of any applicable fees."

You can make it a lot easier for your heirs -- and increase the likelihood that your miles will not go to waste -- by leaving detailed instructions.

Some airlines require heirs to pay a fee to transfer inherited miles to their own accounts. Policies for transferring miles after death differ from airline to airline, and they're not always easy to track down. In most cases, heirs have to supply a copy of the death certificate and proof of beneficiary or an affidavit from the executor of the estate.

Here's a resource that should make this easier: a chart compiled in 2010 on Airfarewatchdog labeled Inheriting Miles: Airline Rules & Procedures. It covers inheritance rules for the major U.S.-based airlines.

It turns out that if your miles are with American Airlines, your heirs can not only inherit them, they will qualify for a discount on the usually hefty transfer fees. Normally, American charges $100 to transfer 5,000 to 10,000 miles and $150 for up to 15,000. If you have fewer than 10,000 AAdvantage miles to bequeath, proof of death is required. If you're leaving more than 10,000 miles, a $50 transfer fee is charged and heirs must provide a copy of your will, or at least the parts that mention your AAdvantage account, identify you and the executor, and display the legal date and signature.

Delta and US Airways have the most generous policies. Delta waives its usual miles transfer fee (one cent per mile plus a $30 processing fee) if the estate's executor sends an affidavit to the Delta service center. If you leave your Delta miles to more than one heir, a letter from all the heirs will be required to assign your account to any one of them.

US Airways also waives transfer fees if a death certificate and proof of beneficiary are provided within six months of the death. If they miss that deadline, it gets trickier. The airline handles late filings on a case-by-case basis. United requires the same thing -- copy of death certificate and proof of beneficiary -- but charges a $75 transfer fee.

See related: Tricks and tips to keep frequent flier miles from expiring, Tying up card debt when death's near

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Vexed by a personal finance problem? CreditCards.com's Q&A experts answer questions from readers every weekday. Ask a question, or click on any expert to see their previous answers.
Gary Foreman, New Frugal You columnist Gary Foreman,
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Erica Sandberg, Opening Credits columnist Erica Sandberg,
"Opening Credits"

Published: August 28, 2012


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