FS Form 1522 must be completed and signed (download or order). It’s possible that your signature will need to be certified (see instructions on the form).
Treasury Retail Securities Services, P.O. Box 2186, Minneapolis, MN 55480-2186, with the bonds, FS Form 1522, and any supporting documentation (if needed).
You must submit legal evidence or other documentation to indicate you are entitled to cash the bond if you are not identified as the owner or co-owner on the bond. (Legal evidence is not returned.)
Individual savings bonds cannot be split; they must be distributed in their entirety.
What is the procedure for an executor redeeming savings bonds?
Bonds made of paper. To buy a paper savings bond, you must first figure out who owns it. The names of the owner or owners are usually printed on a savings bond. If all of the bond’s owners have died, the bond becomes part of the estate of the person who died last. To legally handle a savings bond, you must prove that you are the rightful owner of the bond or that you have the ability to act on behalf of the bond’s beneficiary, such as if you are the executor or administrator of the owner’s estate.
The Treasury Department has outlined several methods if the savings bond is part of the owner’s estate:
- If the bonds are worth less than $100,000 and the estate was not properly managed through a judicial process, the beneficiary should just mail the bond to the Bureau of Public Debt, together with a completed and notarized FS Form 5336 and verification of the owner’s death.
- If the bonds are worth more than $100,000 and the estate is being administered by a court, the personal representative (also known as the executor or administrator) of the estate can redeem the bonds by mailing evidence of his or her appointment as personal representative, a certified copy of the owner’s death certificate, and FS Form 1455, along with the bond.
- The beneficiary must send the bond, proof of death, a notarized affidavit explaining that the bonds belong to named individuals (for small estates) or a final accounting from the estate (for any other estate) to the Bureau of Public Debt if the bond is discovered long after the owner has died and the owner’s estate has already been administered by a court. If there is more than one person who may be eligible to inherit the bond, the heirs must each sign an FS Form 5394 and agree to the bond distribution.
The savings bond does not become part of the deceased person’s estate if a survivor is named on it. The savings bond, on the other hand, belongs to the survivor, who has the option of doing nothing, redeeming the bond, or having it reissued. The bond will continue to generate interest until it matures if the survivor does nothing. A survivor could potentially cash a paper bond by traveling to a financial institution that accepts savings bonds and providing the necessary identity and paperwork (however, only the Treasury Department can cash HH Series bonds). The survivor can also have the bond reissued only in his or her name. Only electronic reissues of Series EE and I savings bonds are available, while paper reissues of Series HH bonds are still available.
Now is a good time to examine if you own any savings bonds and if they’re titled in such a way that they pass to your beneficiaries without going through probate. An estate planning attorney can help you title your savings bonds in a way that is consistent with the rest of your estate plan.
How can I cash in my inherited bonds?
Present the bond (along with identification) to a financial institution that pays savings bonds to redeem it. If the bond is still earning interest and isn’t nearing its end, get it reissued (re-registered) in the survivor’s name alone or in the name of another individual.
Do US Savings Bonds have to go through probate?
According to statistics, many savings bonds are lost because their owners do not maintain track of them or notify their heirs. According to Treasury Direct, a service of the US Department of the Treasury, over $9 billion in savings bonds have stopped generating interest but have not been cashed. It is difficult to identify unclaimed bonds with their legal owners or heirs. Treasury Hunt, a government database, has a small record, although it only covers Series E bonds that have reached final maturity since 1974.
Non-probate assets include savings bonds. As a result, unlike retirement funds and life insurance, they are not usually passed down through the generations according to the stipulations of a will. Instead, they are “payable on death” to the person or entity (such as a trust) specified as co-owner or beneficiary, and can be given as soon as someone passes away.
If no survivor is specified, or if that individual has died, the bond becomes an asset of the estate, which complicates things and makes distribution more time consuming. Federal regulations require that bonds and other Treasury assets with a total value of more than $100,000 be handled through a court. When smaller quantities are involved, Form 5336 leads you through a separate procedure that can only be used when, regardless of the bonds, no court will be involved under state law.
Because savings bonds aren’t considered “sexy” investments, you might be tempted to cash them in right away, but that could be a mistake. Inheritors of bonds that have not yet matured have the option of redeeming the bonds or having them reissued in their own name. You can keep earning whatever interest the bond pays until it matures by reissuing the bonds.
You can use Treasury Direct’s savings bond calculator to figure out how much the bond is worth. When you enter the type of bond (the “series”), denomination, serial number, and issuance date, the calculator will calculate how much interest has already accrued at the current interest rate, as well as when the bond will maturity.
Bonds that have matured and stopped producing interest will be dumped by heirs (find a list here). However, if the bonds are still earning interest, a decision must be made. The interest rate on bonds may be significantly greater than other low-risk investments, such as Treasury bills, certificates of deposit, and money market funds, depending on the type of bond and when it was issued. In that situation, the inheritors may chose to keep them.
When a bond owner passes away, what happens to the bonds?
You can register a savings bond in your own name as the owner and the payable-on-death beneficiary as your chosen heir. While you are alive, only you have redemption and transaction rights as the owner. When you die, your specified beneficiary becomes the owner of the bond, with full redemption and transaction rights. If all named owners and beneficiaries pass away, the bond becomes part of the estate of the last person to pass away, and it is passed down to that person’s heirs.
Is it possible to cash in my parents’ savings bonds?
If you are now the owner of the savings bonds or if your parent listed you as the survivor beneficiary on the bonds, take them to a bank or other financial institution. In the presence of a bank official, fill out the redemption form on the back of the bonds and sign it. A driver’s license or other form of identification is required. You must also provide proof of death if you are mentioned as a survivor. This is usually done by a verified copy of the death certificate. The bank will redeem the bonds and pay you the proceeds.
In an estate, how are savings bonds handled?
The bond is part of the last person to die’s estate. As if the survivor had been the only owner since the bond was issued, the surviving individual becomes the owner.
What are my options for avoiding paying taxes on inherited savings bonds?
If you inherit the bonds, you may have a different option. The bonds can be redeemed by the executor of the deceased’s estate, who will then have them reissued to you after paying the estate’s taxes on the interest. You can avoid paying tax on interest earned during the decedent’s lifetime by doing so.
Savings bonds are assets that are not subject to probate. If no survivor is specified, or if that individual has died, the bond becomes an asset of the estate, which complicates things and makes distribution more time consuming.
Yes. Cashed bonds are reported on IRS Form 1099-INT. When you cash your bond or after the end of the tax year, the form may be available.
Do I have to pay taxes on inherited savings bonds, though? Inheritance from a Decedent’s Estate
Because the interest generated on your inherited bonds is considered income, it must be reported and taxed. The IRS draws a boundary between interest that is considered “income in respect of a decedent” and interest that is considered “your income.”
If the interest wasn’t included in the decedent’s income and estate, you’ll have to pay tax on it when you cash out the bond. When the bond is cashed out, any interest that accrue after the decedent dies is always included in your income.
Do those who receive savings bonds have to pay taxes on them? The law typically states that savings bonds should be transferred to the bond’s beneficiary after death. If the decedent already paid taxes on the accumulated interest, the earnings on inherited savings bonds are not taxable to the heirs, but the heirs are accountable for any unpaid taxes.
To cash a savings bond, what documentation do I need?
If you want to redeem a paper E/EE or I bond, you’ll need a few items. You’ll also need confirmation of identity, such as a driver’s license from the United States. You’ll also need an FS Form 1522 that hasn’t been signed. They’ll see you sign the document and then certify your signature if you go to your local bank or credit union.
The unsigned bonds, along with the signed FS Form 1522 and, if you’re the bond’s beneficiary, accompanying legal evidence or other papers to indicate you’re entitled to cash the bond, should be sent to the US Department of Treasury at:
The same steps apply for series H or HH paper bonds, only you’ll ship the unsigned bonds to the US Treasury at: