Q: I buy all my fuel and chemicals on credit cards. As a result I collect air miles, and have about 200,000 unused. These are of some value but I doubt I will be able to use them personally. I am doing some estate planning and wonder if I can deal with these in my will, or if I can give them away during my lifetime?
A: This is less an estate question than it is one of contract. When a person obtains a credit card, he signs a contract, usually called a cardholder agreement or some similar term.
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However, it’s a contract, plain and simple. That contract sets out the exact terms of the deal between the individual and the credit card company. This includes interest rate, terms of repayment and the card company’s ability to use personal information. Companies frequently sell it to third parties, which is agreed to when the person signs for the card.
The contract may change as the card company issues amendments, which the individual agrees to through continued use of the card. As always, read the fine print.
As well, one size does not fit all. There is a difference between the air miles card and a credit card that gives you air miles.
The credit card has an arrangement with third-party air carriers to provide this benefit to clients. These are usually called loyalty cards and are not limited to air miles. Some will even give a small percentage of a person’s purchases to a designated charity.
The air miles card exists for one purpose only – to induce the person to deal with its merchant network in exchange for getting air miles to assist with travel plans.
A person’s right to the air miles is governed by the agreement he has with the loyalty card. These agreements are different with each card company.
Some contracts state that on the customer’s death the air miles he accumulated are only transferable to his spouse, otherwise they are wiped out. If the customer didn’t have a spouse, the benefit is lost because the points are not transferable to children or other beneficiaries.
Other cardholder agreements state this is a benefit that is purely personal to the cardholder, and it dies when he or she does. Check the agreement to see what it says.
For these reasons, I generally don’t recommend treating these loyalty card benefits as estate building assets, nor do I recommend dealing with them in a will. If the agreement has a transfer provision and a person can gift them to someone else during his lifetime, that is preferable.
However, most of these cards may not allow such a transfer.
Most lawyers have a practice of contacting the card company at death to see if the benefits under the cardholder agreement survive their client’s death, or have any residual value that might be transferable. It’s often a “use it or lose it” situation.
The card company usually has a provision in the cardholder agreement to the effect that it can cancel the arrangement if the card is inactive for a specified time.
The best advice I can give is probably non-legal in nature: go somewhere. While prairie people especially farmers are well-known scroungers and savers, many of these benefits are not designed to be saved, but used.
Rick Danyliuk is a practising lawyer in Saskatoon with McDougall Gauley LLP. He also has experience in teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
