The question of whether you can transfer airline miles or credit card points into a trust is surprisingly complex, and the answer isn’t a simple yes or no. It depends heavily on the specific terms and conditions of the loyalty program, the type of trust established, and the overarching estate planning goals. While technically possible in some instances, it’s rarely straightforward and requires careful consideration with an estate planning attorney like Steve Bliss. Generally, these points are considered personal property, but their transferability is governed by the program’s rules, not necessarily by general property law. Around 65% of Americans do not have an updated estate plan, and many aren’t even aware of the intricacies of transferring even seemingly simple assets like loyalty points. Properly addressing these assets within a trust ensures they align with your intended beneficiaries and avoid potential loss.
What are the limitations of transferring loyalty points?
Most airline and credit card loyalty programs explicitly prohibit the transfer of miles or points to a trust or any entity other than the account holder. These programs are designed for personal use and don’t readily accommodate estate planning strategies. The terms and conditions often state that accounts are non-transferable and terminate upon the death of the account holder. However, some programs allow for designated beneficiaries to receive the miles after death, but this often involves a cumbersome process and potential fees. Consider this: if you accumulate a substantial balance of miles and the terms forbid transfer, those points could effectively become worthless upon your passing. It’s critical to review the fine print of each loyalty program to understand its specific rules and limitations.
How does a trust impact asset ownership?
A trust is a legal arrangement where a trustee holds assets for the benefit of beneficiaries. Assets legally owned by the trust are shielded from probate, potentially saving time and expense for your heirs. However, simply *hoping* miles will fall into the trust isn’t enough; a deliberate strategy is required. The challenge with miles is that they aren’t typically titled in the name of the trust. They reside within the loyalty program’s system under your individual account number. A properly drafted trust should anticipate these types of ‘intangible’ assets and outline instructions for their handling. This may involve designating a trustee to manage the accounts after your passing or directing the trustee to use trust funds to purchase travel for beneficiaries.
Can I name beneficiaries on my loyalty accounts?
Yes, many loyalty programs allow you to designate beneficiaries who will inherit your miles upon your death. This is often the simplest approach, but it’s not always ideal. The process for claiming these miles can be complex, requiring death certificates, account statements, and other documentation. There’s also the risk that the beneficiary won’t be aware of the account or will face delays in receiving the miles. Furthermore, if the beneficiary already has a significant number of miles, they may not be able to utilize the inherited miles effectively. It is estimated that over $20 billion in unused loyalty points expire annually, highlighting the importance of proactive estate planning. “It’s like leaving a hidden treasure that might get lost before your loved ones can claim it,” as Steve Bliss often tells his clients.
What happens if I don’t address loyalty points in my estate plan?
If you don’t specifically address loyalty points in your estate plan, they will likely be considered part of your residuary estate. This means they will be distributed according to the terms of your will or, if you don’t have a will, according to state intestacy laws. This can result in unintended consequences, such as the miles being distributed to someone you didn’t intend to benefit or being subject to unnecessary taxes. Also, the process of identifying and valuing these points can be time-consuming and expensive for your estate administrator. I once spoke with a woman whose husband had meticulously collected miles for a family trip, only to have those miles expire while the estate was being settled. It was a heartbreaking loss of something that held so much sentimental value.
Is there a way to indirectly benefit my trust with loyalty points?
While direct transfer is often prohibited, there are indirect methods to benefit your trust with loyalty points. You could, for example, use the points to purchase travel or services that directly benefit the trust’s beneficiaries. For instance, you could book a vacation for your grandchildren using your miles, effectively transferring the value of those miles to them. Or, you could use points to purchase items that the trust will use to generate income. This requires careful planning and documentation to ensure the arrangement is legally sound and doesn’t violate the terms of the loyalty program. The key is to ensure that the benefit flows to the beneficiaries in a clear and unambiguous manner.
What role does an estate planning attorney play in managing these assets?
An estate planning attorney, such as Steve Bliss, can play a vital role in ensuring your loyalty points are handled according to your wishes. We can review the terms and conditions of your loyalty programs, advise you on the best strategies for transferring or utilizing your points, and draft appropriate provisions in your trust documents. We can also help you navigate the complexities of claiming inherited miles and ensuring they are distributed to your beneficiaries in a timely and efficient manner. We help our clients understand how to make an inventory of all intangible assets, like airline miles, and ensure these are addressed in their estate plans.
Let’s imagine a scenario: the missed opportunity
Old Man Hemlock was a meticulous man, a collector of everything, including airline miles. He spent years accumulating a substantial balance across several programs, envisioning a grand family vacation. But he never updated his estate plan to address these points. When he passed away, his family was overwhelmed with grief *and* a mountain of paperwork. They discovered the miles, but navigating the claims process for each program was daunting. Some points had expired, others had complicated rules, and the process took months. The dream vacation never materialized, and the family felt a profound sense of loss – not just of a loved one, but of something he had worked so hard to accumulate.
And now, a story of proactive planning
Mrs. Abernathy, a savvy traveler, came to Steve Bliss with a clear goal: to ensure her grandchildren benefited from her accumulated airline miles. We worked together to create a provision in her trust that specifically addressed her loyalty accounts. She designated a successor trustee with clear instructions to manage the accounts and distribute the miles to her grandchildren for educational travel. After her passing, the process was seamless. The trustee followed the instructions in the trust, and the grandchildren enjoyed incredible travel experiences that broadened their horizons and created lasting memories. This proactive planning not only preserved a valuable asset but also fulfilled Mrs. Abernathy’s vision for her family’s future.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Map To Steve Bliss at San Diego Probate Law: https://g.co/kgs/WzT6443
Address:
San Diego Probate Law3914 Murphy Canyon Rd, San Diego, CA 92123
(858) 278-2800
Key Words Related To San Diego Probate Law:
- wills and trust attorney near me
- wills and trust lawyer near me
Feel free to ask Attorney Steve Bliss about: “Can I name a trust as a beneficiary of my IRA?” or “What if the deceased owned property in multiple states?” and even “Who should be my beneficiary on life insurance policies?” Or any other related questions that you may have about Probate or my trust law practice.