Law Times

Law Times • June 17, 2013 BRIEF: TRUSTS & ESTATES LAW Page 13 Lawyers urged to consider loyalty programs in wills But not all programs allow members to transfer points upon death BY CHARLOTTE SANTRY Law Times T he average Canadian household belongs to eight loyalty programs that allow them to collect air miles and grocery store points, according to a recent survey. But only one in 10 respondents knew they were often able to bequeath the balance of loyalty programs in a will. The LoyaltyOne Inc. survey of 1,090 loyalty program members found that 84 per cent hadn't considered what would happen to their points upon their death and only three per cent had formed a plan, such as a will, to allocate them. "These points will go unaccounted for unless Canadians work with their families to develop a points and miles bequest plan," warns Carlos Dunlap, LoyaltyOne's director of marketing. Estate lawyer Margaret O'Sullivan says it's uncommon for clients to incorporate loyalty points into their will. However, it's important to ask about all of the schemes a client may belong to when planning estates, she notes. "A client could have two to three million air mile points," she says. "They have a lot of value and can often be used to redeem other benefits and gifts." In these circumstances, advanced planning can avoid some of the hiccups that can crop up when transferring loyalty points. For example, Shoppers Drugs Mart doesn't allow members of its Optimum scheme to transfer loyalty points upon death, an employee tells Law Times. Instead, members would need to pass them on while they were still alive. Another consideration is how to divide loyalty programs among the heirs if that's a relevant consideration. Such issues can be complex and it's normally against the rules to simply hand over passwords to a non-authorized person, says O'Sullivan. Even when it's possible to transfer points after death, trying to arrange that after a person has died can be stressful for relatives. All of the schemes have different rules, a situation that creates a mixed and potentially muddled picture. "My experience is that they will have a difficult job. For someone to try to administer all the transfers, it's a matter of contacting each company," says O'Sullivan. For instance, some programs have specific conditions attached by prohibiting members from gifting points to children. In other instances, a charge will apply. Aeroplan's terms and conditions state that miles and rewards can't be transferred, but its practice is to allow transfers "on a compassionate basis" following the death of a member at a cost of one cent per mile plus a $30 processing fee and taxes. Under a second option, Aeroplan doesn't charge the one-cent fee, but people must claim the miles within a year of the death. Both scenarios require a copy of the death certificate and the will. The fees typically charged for moving points from one account to another range from $50 to $75, which could dilute the value of small gifts. According to the web site moneysense.ca, people can transfer points upon death from Air Miles, WestJet, Club Sobeys, and Hudson's Bay Co. but not from Petro-Points, Plum Rewards, Scene or Best Buy. Esso Extra requires the recipient to be a previously registered joint account holder. 'For someone to try to administer all the transfers, it's a matter of contacting each company,' says Margaret O'Sullivan. Estate litigation lawyer Kimberly Whaley agrees on the need for clients to be proactive. "It is important for each person planning their estate plan to inquire with each provider and get the details upfront as to what is transferable, what the process is, and what are the penalties and costs," she says. As well as finding out whether clients have accumulated significant points, estate lawyers must gather any necessary account details about loyalty programs, she adds. LoyaltyOne also suggests those planning their estates should make a list of all of their loyalty programs and collect updated policy information for all of them in writing. There are online services and applications that manage all of a person's loyalty programs in one place and provide alerts when points are about to expire. Many points systems, such as Aeroplan and Air Miles, also allow people to donate to particular charities. But there are other non-monetary assets, such as securities and stock options, that people can gift philanthropically but may overlook when it comes to estates planning. Not everyone realizes they can leave such assets to charities in their will, says Anne Brayley, Toronto Community Foundation vice president for philanthropic services. Her organization helps individuals to contribute to a specific endowment fund or establish their own foundation. "The most tax-efficient way to make a charitable donation is from securities," she says. That's particularly true for individuals who have fewer options than corporations regarding the way their securities are taxed. Another tax-efficient option is to name a charity as the beneficiary in an insurance policy, according to Brayley. "When lawyers are doing estate and tax planning, where it relates to philanthropy, these are issues to consider," she adds. LT Yo u b u i l d y o u r re s u m e . Yo u b u i l d a c a re e r. A d re a m . Yo u c a n b u i l d a h o m e , a f a m i l y and friendships. In 30 minutes a day you can build your muscles. Yo u c a n b u i l d a t ro p h y c a s e . A w i n e c e l l a r. A b i rd f e e d e r. A life. When you look at everything you've built, will a legacy be among them? C re a t i n g a l a s t i n g c h a r i t a b l e l e g a c y i s e a s i e r a n d m o re e a ff o rd a b l e t h a n y o u m i g h t t h i n k . To l e a r n h o w, v i s i t t c f . c a Untitled-2 1 www.lawtimesnews.com 13-06-10 10:17 AM

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