Take care when deciding to cash U.S. savings bonds owned by a minor child. A child has significant control over her ownership in bonds. If the child has reached the walking, talking and thinking stage of life, she gets to sign her own savings bonds if cashed in. The bank has the right to refuse to redeem bonds presented by parents but owned by a minor.
Savings Bond Ownership
Savings bond rules allow minor children to own savings bonds in their own names without a co-owner or some form of guardianship named on the bond. When the child is old enough to sign a bond and understand what he is doing, he can take the bond to the bank and cash it in. If a parent is not named as a co-owner on a bond, the parent has limited rights to redeem the bond.
A parent or guardian can cash a minor's savings bond only if the child is too young to sign the bond on her own. A parent who wants to cash a child's bond probably should take the child to the bank to show the bank officials that the bond owner is not yet old enough to sign for herself. Once a child is old enough and aware enough to put her own signature on the savings bond, a parent cannot cash in the bond without having the child sign it in the presence of a bank officer.
Bank Retains the Option
The U.S. Treasury, in its rules to banks covering the redemption of savings bonds, makes cashing bonds for minors who cannot sign optional. If the child is not old enough to sign, the bank can refuse to redeem the bond. If the bank does allow a parent to cash the bond, specific wording will be required by the bank officer to indicate the parent has legal custody of the child and is redeeming the bond for the benefit of the child. The bank will note on the bond the identification information provided by the parent.
Redeem By Mail
If your local bank will not redeem a child's bond on the parent's signature, the bond can be mailed to the U.S. Treasury and a government check will be mailed for the value of the bond. The savings bond must still first be taken to the bank to have the parent's personal information and signature verified. The bank can give you the Department of the Treasury address to which the bond should be mailed.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.