Cashing in reward points after death

Executors should tread carefully to ensure survivors receive value


Cashing In
Cashing In columnist Tony Mecia
Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. He writes "Cashing In," a weekly column about credit card rewards programs, for

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Question Dear Cashing In,
I am an executor of a will. There are four beneficiaries. Is it easier and less complicated to request four gift cards from American Express for a Platinum credit card before canceling the account after full payment? -- Carlos

Answer Dear Carlos,
When a cardholder dies, the fate of the remaining reward points can seem murky. 

If you examine the terms and conditions of these programs, you'll frequently see these kinds of rules regarding reward points and miles: They are not your property. They have no cash value. You can't transfer them to others. And some programs explicitly say that you lose your points if you die.

So if they're not your assets and are not worth anything, what is there to pass along if you pass away? 

The truth, of course, is that these points do have value. You can redeem them for flights or merchandise or hotel stays or cash. And in practice, companies that issue points are rightfully reluctant to take them away from grieving heirs.

Carlos, in most cases the bank or airline that holds the reward points is going to be open to working with you as executor and help you redeem the points or transfer them. 

In your case, American Express is one of the few companies that provides a detailed description of how the process works. It says: "The Membership Rewards points accumulated by a deceased Cardmember may be reinstated to a new basic account or be redeemed by the estate of the deceased Cardmember."

It then provides explicit instructions for redeeming the points and what documentation must be included, such as the death certificate. 

I think your plan to cash the points out for gift cards is sensible. Under American Express' rules, you could preserve the points by having them transferred to one of the beneficiaries. However, points are notoriously difficult to value, so if you transferred them to one of the beneficiaries, that would raise the issue of how you account for that value with the remaining beneficiaries.

It seems cleaner and more practical to redeem for something of tangible value, such as gift cards, and be done with it. You can redeem points for gift cards from many different kinds of merchants, such as movie theaters, restaurants and clothing retailers. Most seem to be available for 1 cent per point, so, for example, a $50 Pottery Barn gift card is available for 5,000 points. 

If you weren't in the situation of needing to liquidate the points, there are ways to receive more value than 1 percent back, such as transferring the points to an airline and booking a plane ticket. But for the ease of redemption and to bring some closure to the process, this route sounds prudent.

In any event, you will definitely want to address this issue before closing the account. If you close an account that has bank-sponsored reward points -- such as American Express Membership Rewards, Chase Ultimate Rewards and Capital One miles -- you typically lose those points. Make sure you redeem them before closing an account.

See related: Some frequent flier miles, reward points can be inherited, Authorized users can sometimes gain late cardholder's rewards, What happens to credit card debt after death

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Published: July 21, 2015

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