Building on the insights shared in my previous blog post on February 22, 2024, where we explored the intersection of Aeroplan points and Estate Planning, let’s delve into another widely-utilized points program within our community – the American Express Membership Rewards (MR) points.

Regrettably, American Express provides limited guidance on handling points in the event of the points owner’s demise. Their Membership Reward Terms and Conditions do not explicitly address this matter. After reaching out to American Express, I was informed that in the event of the points owner’s passing, the initial step is to submit a death certificate and notify them. Following this, a certificate of appointment of estate trustee must be provided, as they will only engage with the appointed executor.

It’s worth noting the departure from the conventional practice where the beneficiary of the residue of the estate typically inherits the points. American Express, in contrast, stipulates that the executor assumes the role of decision-maker in determining the points’ recipient. The ambiguity in American Express’ procedures raises concerns, potentially leading to litigation for owners with substantial points in the future.

It’s important to clarify that these procedures specifically apply to American Express Canadian account holders. Canadians holding an American Express account in the US market benefit from a well-established procedure. In the US market, individuals can name a joint account holder or designate a beneficiary.

Estate Administration Tax

Estate Administration Tax is indeed a crucial factor to take into account. The pertinent question emerges regarding whether Aeroplan Points and American Express MR points fall within the purview of this tax. The key issue hinges on establishing whether these points meet the criteria for classification as property under the law.

Given that the points are considered intangible property, the resolution of the second issue becomes relatively straightforward. Following the guidelines set by the Ontario government on valuing the estate, it’s established that all forms of property, including intangible property, are subject to estate administration tax.

However, the last and most complicated issue is determining the value of the points to calculate the estate administration tax. Since there is no specific guideline available, obtaining an appraisal could prove to be a complex process. Additionally, with no established fair market value, the most feasible approach to calculating the points would be using the off-market value. In this scenario, it becomes the Ministry of Finance’s responsibility to decide whether to accept the value presented in the Estate Information return.

In conclusion, the points-related issues in estate administration are relatively novel, with limited case law. It is plausible that we may witness these matters brought before the courts in the future, albeit infrequently.

Thank you for reading, and enjoy the rest of your day.

Tiansheng Wen