The Overlooked Asset of Loyalty
Recently, Aeroplan (the Air Canada loyalty awards program) notified members of the cancellation of its seven-year mileage redemption policy. Prior to revoking this policy, points that accumulated and remained unused after seven years expired. Now these points can potentially continue to exist indefinitely; a move which greatly adds to the value of these assets in the long term.
Already, it is estimated that three trillion frequent flyer miles are given to U.S. loyalty plan members annually; and such programs continue to proliferate beyond the use of more ‘traditional’ industries such as airlines, hotels and credit cards.
Planning a will requires a detailed analysis of the assets of an estate – and as one of the newest and most overlooked assets available to most consumers, loyalty points are often overlooked; in fact, “only one in ten loyalty program members know they can bequeath unused points or miles,” according to a recent survey.
There is a huge range in the value of loyalty points that a given individual may own; however it appears that for most people, they are richer than they think: the average Canadian household currently participates in over 9 loyalty programs.
As with most digital assets, each loyalty program will vary in terms of the ability to inherit rewards or points. It is therefore advisable to seek the insight of a professional to determine the value and transferability of a given rewards program. Certain programs have varying levels of restrictions regarding who is able to inherit points, where others establish limitation periods on how long after the death of a plan holder one must come forward as a potential beneficiary of such a plan.
As such plans continue to become more popular, and as the baby boomer generation plans for retirement, it becomes increasingly important for estate planners to recognize that loyalty programs potentially represent a large asset worthy of consideration when drafting wills.
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