U.S. savings bonds have long been one of the favorite securities for individual investors. You can buy them for as little as $25. They're backed by the full faith and credit of the United States government, so they're about the safest investments you can make. They are one of the few securities that minors can own in their own name, so you can buy them for your kids, and you can defer paying taxes on the interest until the bond matures. If a relative who owns U.S. savings bonds dies, you can still cash those bonds in.
Determine the ownership of the bonds. How the U.S. savings bonds are registered with the Treasury Department dictates how the bonds are handled for redemption. The bonds may have been registered in your relative's name alone, jointly in your relative's name and in your name, or jointly in your relative's name and in another person's name. If you are named as a registered owner, you don't have to do anything, You automatically become the sole owner of the bond. You can cash the bond in through normal procedures, or you can hold the bond until it matures.
Determine who the beneficiary is. If your relative was the sole owner of the bond, the bond becomes a part of her estate when she died. If the total amount of savings bonds in the estate is $100,000 or less and you are the beneficiary, you can request disposition of the bonds by submitting a completed Form PD F 5336 E along with the bonds and proof of death to the Bureau of the Public Debt. If the estate is being administered by the court, such as when the total amount of savings bonds in the estate exceeds $100,000, the court-appointed administrator can redeem the savings bonds by adequately identify himself as the estate's representative, and presenting a certified copy of the bondholder's death certificate. The court-appointed representative may also request distribution of the bond's to those entitled to the estate by submitting a completed Form PD F 1455 to the Bureau of Public Debt.
Pay the appropriate taxes. The interest on U.S. savings bonds is exempt from state and local income taxes, but you still have to pay income taxes on the interest at the federal level. You typically have the option of including any interest earned up to the time of death with the deceased bondholder's final tax return. You can hold the bond until maturity and pay taxes on the interest at that time, or you can cash in the bond and pay taxes on the accrued interest.
Items you will need
- Proof of death
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