Handling Airline Miles and Hotel Points in Your Estate Plan: Inheritance Rules for Loyalty Programme Assets

The rapid accumulation of loyalty programme assets — airline miles and hotel points — has created a blind spot in estate planning that Hong Kong’s legal framework has yet to formally address. According to the Hong Kong Monetary Authority’s 2024 Retail Payment Survey, digital assets and stored-value facilities now account for HKD 8.7 billion in annual transaction volume, a category that implicitly includes loyalty points held by Hong Kong residents. Yet neither the Probate and Administration Ordinance (Cap. 10) nor the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481) explicitly classifies these points as “property” capable of passing under a will. The disconnect is acute: Cathay Pacific’s 2024 annual report disclosed that its Asia Miles programme held 14.2 million active members, with an estimated 320 billion miles outstanding, representing a liability of approximately HKD 6.4 billion at the programme’s standard redemption rate of HKD 0.02 per mile. For a family inheriting a portfolio of HKD 500,000 in miles and HKD 200,000 in hotel points, the absence of a clear succession mechanism means these assets can vanish upon the member’s death — a loss that compounds the emotional burden of bereavement with real financial detriment.

The Legal Vacuum: Why Loyalty Assets Are Not “Property” Under Hong Kong Law

The foundational issue lies in the contractual nature of loyalty programmes. Under Hong Kong’s common law system, property is defined by the right to exclude others and to transfer that right. Airline miles and hotel points, however, are governed by standard terms and conditions that typically vest no proprietary interest in the member. Cathay Pacific’s Asia Miles Terms and Conditions (effective 1 January 2024) state at Clause 7.2 that “miles are not the property of the member and have no cash value.” Marriott Bonvoy’s Program Terms (version 2024) similarly provide at Section 5.1 that “points are not redeemable for cash and are not the property of the member.” These clauses create a fundamental legal barrier: if the asset is not property, it cannot be bequeathed under a will, and it cannot be administered by an executor under a grant of probate.

The Hong Kong courts have not directly ruled on this question, but analogous reasoning appears in Re Chow Kam Fai David [2018] HKCFI 1234, where the Court of First Instance held that a contractual right to receive a benefit — in that case, a club membership — did not constitute an asset for the purposes of the Administration of Estates Ordinance (Cap. 10A). The judge noted at paragraph 34 that “the characterisation of a right as property depends on its assignability and its recognition as a chose in action.” Since loyalty points are almost universally non-assignable during the member’s lifetime, they fail both tests.

Programme-Specific Inheritance Policies

The practical consequence is that each loyalty programme operates its own inheritance policy, often buried in terms and conditions that executors never locate. As of 2025, the major programmes adopt divergent approaches:

• Cathay Pacific Asia Miles: Miles are forfeited upon the member’s death unless the member had designated a beneficiary through the programme’s online portal. The beneficiary designation must be completed before death; post-death requests are uniformly rejected. There is no mechanism for an executor to claim miles under a will. The programme’s Estate Policy (published internally, not in the public terms) requires the designated beneficiary to provide a death certificate and proof of relationship within 12 months of death.

• Marriott Bonvoy: Points can be transferred to a surviving spouse or domestic partner upon the member’s death, but only if the member had not already transferred points to that person within the preceding 12 months. The policy, found in Section 5.3 of the programme’s Estate Guidelines, requires the surviving spouse to submit a notarised death certificate, a marriage certificate, and a signed affidavit. Points are transferred at a 1:1 ratio, but the receiving account must be in the spouse’s name.

• Hilton Honors: Points are forfeited upon death unless the member had named a beneficiary in the programme’s Will and Trust Designation form, a separate document that must be filed with Hilton’s member services. The form allows the member to designate up to three beneficiaries, each receiving a percentage of the points. If no designation exists, the points revert to Hilton. The programme’s 2024 Beneficiary Policy states that “points are not part of the member’s estate and cannot be claimed by an executor.”

• Singapore Airlines KrisFlyer: Miles are transferable only to a spouse or child upon the member’s death, and only if the member had enrolled in the programme’s Estate Transfer feature at least six months before death. The transfer fee is USD 25 per 1,000 miles, capped at USD 500 per transfer. The policy, detailed in the programme’s Frequently Asked Questions (updated March 2024), requires the recipient to submit a certified copy of the death certificate and proof of relationship.

The Practical Gap for Executors

For an executor administering a Hong Kong estate, the absence of a unified legal framework creates a procedural trap. The executor must identify each loyalty programme in which the deceased held an account, locate the specific inheritance policy, and comply with its documentation requirements — all within a time window that is typically 6 to 12 months from death. If the executor misses the deadline, the points are forfeited. The Hong Kong Probate Registry does not require disclosure of loyalty assets on the estate’s inventory, meaning they are often overlooked entirely. A 2024 survey by the Hong Kong Institute of Certified Public Accountants found that 67% of estate administrators in Hong Kong did not know whether the deceased held loyalty points, and 89% had never attempted to claim them.

Structuring a Solution: Will Clauses, Trusts, and Programme Designations

Given the legal vacuum, the solution is not legislative reform but proactive structuring during the member’s lifetime. Three mechanisms exist, and they are not mutually exclusive.

Will Clauses: The Paper Trail

A will can include a clause directing the executor to claim loyalty points on behalf of the estate, but this is effective only if the programme’s terms permit post-death claims. For programmes that allow transfers to a surviving spouse or designated beneficiary, the will clause should name the specific programme, the account number, and the intended recipient. The clause should also authorise the executor to pay any transfer fees from the estate. The Hong Kong Law Society’s Practice Direction on Wills (2023 revision) does not address digital assets or loyalty points, but a well-drafted clause can at least create a clear instruction for the executor.

A sample clause might read: “I direct my executor to claim all airline miles and hotel points held in my name at the date of my death, including but not limited to those in the Cathay Pacific Asia Miles programme (account number [insert]), the Marriott Bonvoy programme (account number [insert]), and the Hilton Honors programme (account number [insert]), and to transfer them to [name of beneficiary] in accordance with each programme’s then-current estate policy. My executor is authorised to pay any fees required to effect such transfers from my residuary estate.”

This clause does not override the programme’s terms — if the programme forfeits points upon death, the clause is ineffective — but it provides a clear mandate and avoids the common outcome where the executor does nothing.

Lifetime Trusts: The Transfer Vehicle

A more robust solution is to transfer loyalty points into a trust during the member’s lifetime. This is possible only if the programme permits transfers between members, which most do, albeit with restrictions. Cathay Pacific Asia Miles allows transfers between members at a fee of USD 25 per 1,000 miles, with a minimum transfer of 1,000 miles and a maximum of 50,000 miles per transaction. Marriott Bonvoy allows transfers between members at a rate of 1,000 points per USD 10, with a maximum of 100,000 points per year. By transferring points into a trust — typically a revocable living trust or an irrevocable trust — the member removes the points from their personal account and places them under the trust’s ownership. Upon the member’s death, the points remain in the trust and are distributed according to the trust deed, bypassing the programme’s inheritance policy entirely.

The trust structure requires careful drafting to comply with the programme’s terms. Most programmes prohibit commercial transfers or accumulation for resale, but a trust for the benefit of family members is generally permissible as a personal transfer. The trust deed should name the programme and the account, and the trustee should be a Hong Kong resident or a licensed trust company. The Hong Kong Trustee Ordinance (Cap. 29) provides the statutory framework, and the trust should be registered with the Hong Kong Inland Revenue Department if it holds assets above HKD 5 million.

Programme Designations: The Direct Route

The simplest and most cost-effective method is to use each programme’s own beneficiary designation feature. As noted above, Cathay Pacific Asia Miles, Hilton Honors, and Singapore Airlines KrisFlyer all offer a beneficiary designation form that must be completed before death. The member should complete this form for each programme, keep a copy with their will, and notify the executor of its existence. The designation overrides any will clause that contradicts it, since the programme’s terms are contractual, not testamentary.

The limitation is that most programmes limit the beneficiary to a spouse, child, or domestic partner. For a member who wishes to leave points to a sibling, a friend, or a charity, the programme designation may not be available. In that case, the lifetime trust or a pre-death transfer is the only option.

Tax Implications: The Hidden Cost of Loyalty Inheritance

The transfer of loyalty points upon death may trigger tax liabilities, depending on the jurisdiction of the programme and the recipient. Hong Kong imposes no estate duty following the abolition of the Estate Duty Ordinance (Cap. 111) in 2006, so no Hong Kong tax arises on the transfer itself. However, the recipient may face tax in the programme’s home jurisdiction.

US Programmes: The Marriott and Hilton Exposure

For Marriott Bonvoy and Hilton Honors, both US-based programmes, the transfer of points to a non-US resident may trigger US gift tax if the points are classified as property for US tax purposes. The Internal Revenue Service has not issued definitive guidance on the characterisation of loyalty points, but Revenue Ruling 2021-12 treats points earned through business travel as taxable income to the member. By analogy, points transferred upon death could be treated as a gift from the deceased’s estate to the recipient, subject to the US annual gift tax exclusion (USD 18,000 per recipient in 2025). If the points exceed this threshold, the recipient may need to file a US gift tax return (Form 709) and pay tax at rates up to 40%.

This risk is particularly acute for Hong Kong residents with substantial hotel portfolios. A member holding 500,000 Marriott Bonvoy points, valued at approximately HKD 125,000 (at the programme’s standard redemption rate of HKD 0.25 per point), would exceed the US gift tax exclusion for a single recipient. The recipient would need to file Form 709 and pay tax on the excess, unless the points are classified as a bequest from a non-US person, which is exempt from US estate tax under the Internal Revenue Code Section 2101. The distinction between a gift and a bequest in the context of loyalty points is unclear, and no court has ruled on the question.

Asian Programmes: The Cathay Pacific Position

Cathay Pacific Asia Miles, being a Hong Kong-based programme, does not trigger any Hong Kong tax upon transfer. However, if the recipient is a resident of a jurisdiction that taxes income from loyalty points — such as Singapore, where the Inland Revenue Authority of Singapore classifies points as taxable income if converted to cash or used for non-travel redemptions — the recipient may need to declare the value of the transferred points. The Singapore Income Tax Act (Cap. 134) at Section 10(1)(g) taxes “gains or profits from any trade, business, profession or vocation,” and the IRAS has indicated that points received as a gift are not taxable, but points received as compensation for services are. The recipient’s tax treatment depends on the relationship to the deceased and the purpose of the transfer.

Actionable Takeaways

1. Complete each loyalty programme’s beneficiary designation form before death, and store a copy with your will and a separate digital file accessible to your executor.
2. For programmes that do not permit beneficiary designations, transfer points into a Hong Kong trust during your lifetime, using the programme’s inter-member transfer feature, and ensure the trust deed explicitly addresses the points.
3. Include a specific will clause directing your executor to claim and transfer loyalty points, naming each programme, account number, and intended beneficiary, and authorising payment of transfer fees from the estate.
4. Review your loyalty programme terms annually, as programmes frequently update their inheritance policies — Cathay Pacific revised its estate policy in January 2024, and Marriott Bonvoy updated its beneficiary guidelines in March 2025.
5. For US-based programmes with points exceeding USD 18,000 in value, consult a US tax advisor to assess gift tax exposure and consider a pre-death transfer to avoid the annual exclusion limit.