This was actually an entry for the Gold Coast contest on one of the other blogs (and I need to search to remember which one). This has also been discussed on Flyertalk when a jetsetting family member dies.
The way the airlines have it set up frequent flyer miles belong to the person on the account and in the case of death those miles technically go bye-bye. The thing is that airlines don’t know that someone died so the real limiting factor is that no living person knows the password to that account. For someone with a serious mileage balance part of the will should include user logins and passwords for frequent flyer accounts so surviving members can use remaining miles. Airlines like United require the redeemer to go to an airport in person to present ID for a reward flight booked over the phone in certain situations, but other airlines have different rules. Usually if the last name on the ticket is the same as the account holder there is less of an issue.