How to Cash in a Savings Bond for a Deceased Relative

Since savings bonds can be purchased in increments as small as $25, they are an investment that most people can afford. Consumers used to be able to buy a savings bond from either the U.S. Department of the Treasury, a bank or a credit union; however, they are now only available electronically via the TreasuryDirect website. Once purchased, the savings bonds can only be cashed by their owner. If the owner passes away, you'll need to follow the proper procedure to obtain the bond funds.

Visit TreasuryDirect and use their savings bond calculator to determine the bond's current worth. You'll need to enter the series, denomination, serial number and issue date. The calculator will then let you know what the bond is worth and whether it has fully matured. It may be worth holding on to the bond for a few years before you cash it.

Review the bond and search for a named survivor. If there is a survivor listed, that individual has the right to cash the bond by providing proper identification and the relative's death certificate. The survivor can also opt to have the savings bond reissued in his name, although this isn't necessary. The individual can simply hold on to the bond until he is ready to cash it.

Should the savings bond not list a survivor and the bonds have a value of more than $100,000, then the court must be notified. The bonds are considered part of the deceased individual's estate, and a court-appointed representative will need to determine who will inherit the bonds should there be no outstanding debt to pay.

If your family member didn't leave behind a large estate that requires going through the court system, you can fill out FS Form 5336 instead. Once the information has been filled out, the form must be signed in front of a certifying official. Place the form, the original bond and your loved one's death certificate in a bubble mailer and send it to Treasury Retail Securities Site, PO Box 214, Minneapolis, MN 55480-0214.

After you've received the cash from turning in the savings bonds, you'll need to set aside the federal tax that will be due when you file taxes at the end of the year. A tax adviser can give you an accurate estimate, or you can consult IRS Publications 550, 17 and 559 to get an idea of how much tax you'll owe.