A child’s savings bond can be cashed by a parent or legal guardian.
Can my savings bond be cashed by someone else?
When it comes time to cash in your savings bonds, as long as you have the necessary documentation, the process will be relatively simple. It’s important to keep in mind that savings bonds cannot be sold, exchanged, or given away. The only person who can cash in the bond is the person whose name is on it (with a few exceptions, which we’ll discuss shortly).
First and first, you’ll need the bond (unless it’s an electronic bond, in which case there’s no step at all). The monies are deposited into your bank account once you cash it in via the Treasury Web site). However, make certain that the bond may be cashed: It’s been at least a year since it was published (some bonds only require a six-month retention period).
How can I have my children’s savings bonds cashed?
Savings bonds are popular gifts for young children, and grandparents often regard them as a good opportunity to invest in their grandchildren’s future. However, in some situations, parents will want to spend the earnings from savings bonds while their child is still a minor. In that instance, the parent must cash in the bond through US Treasury processes.
The Treasury distinguishes between paper savings bonds and electronic savings bonds. The Treasury permits parents to redeem their children’s paper bonds provided two conditions are met. To begin, the youngster must be too young to sign the payment request. Second, the child must either live with the parent or have legal possession of the child.
The Treasury recommends that you put particular language on the back of the bond and sign it as a parent on behalf of the child to redeem it. The following is the language used:
“I confirm that I am the parent of.resides with me / I have been given legal custody of.is years old and is incapable of making this request.”
If the parent takes the bond to a local financial institution ready to redeem it for him or her, the institution can pay the parent directly. If the bond is not redeemable at the local financial institution, the parent must have the signature guaranteed or attested before sending the bond to the Treasury Retail Securities Site. The Treasury website has more information.
What is the procedure for cashing a savings bond that is not in my name?
If you are not identified as the owner or co-owner on the bond, you must produce legal evidence or other documentation to establish you are entitled to cash the bond, regardless of where you cash it. (Legal evidence is not returned.)
It is important to note that savings bonds cannot be transferred. You can’t cash a bond that belongs to someone else or that you bought on an internet auction site. (See Death of a Savings Bond Owner if you inherit a bond through the death of the bond owner.)
To cash a savings bond, how old do you have to be?
Savings bonds, issued by the United States government, are a safe and secure investment that come in denominations ranging from $25 to $10,000. Bonds issued after April 2005 have a fixed interest rate, while those issued prior to that have a variable interest rate (1997-2005).
Savings bonds can be purchased by anybody 18 or older with a valid Social Security number, a U.S. bank account, and a U.S. address. They can be paid in after one year, but there is a penalty if you cash them in during the first five years. Otherwise, you can hold on to savings bonds until they reach their full maturity, which is usually 30 years. You may only buy electronic bonds these days, but you can still cash in paper bonds.
You may have bonds in the Series E/EE, Series I, or Series H/HH series. For up to 30 years, a series E/EE bond pays a set rate of interest. The interest on a Series I bond is calculated by combining a fixed rate with an inflation rate. Series H/HH bonds are unique in that you pay face value and get interest payments every six months by direct deposit into your bank or savings account until maturity or redemption.
Is it possible to cash my daughter’s savings bonds?
Only if the child is too young to sign the savings bond on her own can a parent or guardian cash it. A parent who wishes to cash a child’s bond should generally take the youngster to the bank with him or her to show the bank officials that the bond owner isn’t old enough to sign for herself. A parent cannot cash in a savings bond without having the child sign it in the presence of a bank representative once the child is old enough and aware enough to put her own signature on it.
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.
When cashing in savings bonds, how do I avoid paying taxes?
Cashing your EE or I bonds before maturity and using the money to pay for education is one strategy to avoid paying taxes on the bond interest. The interest will not be taxable if you follow these guidelines:
- The bonds must be redeemed to pay for tuition and fees for you, your spouse, or a dependent, such as a kid listed on your tax return, at an undergraduate, graduate, or vocational school. The bonds can also be used to purchase a computer for yourself, a spouse, or a dependent. Room and board costs aren’t eligible, and grandparents can’t use this tax advantage to aid someone who isn’t classified as a dependent, such as a granddaughter.
- The bond profits must be used to pay for educational expenses in the year when the bonds are redeemed.
- High-earners are not eligible. For joint filers with modified adjusted gross incomes of more than $124,800 (more than $83,200 for other taxpayers), the interest exclusion begins to phase out and ceases when modified AGI reaches $154,800 ($98,200 for other filers).
The amount of interest you can omit is lowered proportionally if the profits from all EE and I bonds cashed in during the year exceed the qualified education expenditures paid that year.
When I cash in my savings bonds, will I receive a 1099?
On January of the following year, 1099-INTs are posted in TreasuryDirect. Use the ManageDirect page’s URL.
If you cash at a bank, the paperwork is provided. The bank may give you the form right away or mail it to you later, maybe after the year in which you cash the bond has ended.
If you cash with Treasury Retail Securities Services, the form will be mailed to you in January of the following year.
POA can cash in savings bonds.
To cash savings bonds, the attorney-in-fact must complete and sign a Special Form of Request for Payment of United States Savings and Retirement Securities Where Use of a Detached Request Is Authorized in his or her fiduciary capacity (FS Form 1522).
When someone dies, what happens to their savings bonds?
A savings bond is defined as a financial instrument that can be used to save money “a debt security issued by the United States Treasury to assist fund the government’s borrowing needs.” When you buy a savings bond, you are effectively lending money to the United States government, which is reimbursed with interest after a set length of time.
There are two types of savings bonds available right now: Series EE U.S. Savings Bonds are currently marketed at face value and are redeemable for their full face value plus interest. Series I U.S. Savings Bonds are inflation-indexed, which means they pay a set rate of interest that is adjusted for inflation over time. They’re a popular long-term investment. The bonds of the Series HH are no longer available for purchase.
Savings bonds are a stable investment that is appealing during times of economic turmoil since their value does not vary. They are, however, usually not refundable for at least five years (unless you are willing to forgo the last three months’ interest as a penalty). This implies you might not be able to easily access the money you’ve put into savings bonds. Savings bonds can be purchased in denominations as small as $25 or as large as $10,000.
If you own savings bonds or plan to buy them, there are a few estate planning considerations to consider.
Probate is the court-supervised process of verifying the validity of a will (if one exists) and ensuring that the deceased person’s money and property are passed to the correct beneficiaries, as well as any outstanding bills or taxes. Probate is a time-consuming, expensive, and public process that many people try to avoid. The way a savings bond is titled, or how it is owned, determines whether it must go through probate.
There is only one owner. Individuals frequently purchase savings bonds that are named in their own name. However, even if you have a will indicating who you want to inherit the savings bond, it will become part of your estate and will have to go through the probate procedure if you choose this option. If you die without leaving a will, your savings bond will be distributed to a beneficiary determined by your state’s intestacy legislation ( “The state’s default estate planning procedures for those who don’t undertake their own preparation are known as “intestate statutes.”
Decide on a co-owner. As co-owners, two or more people can own a savings bond. Each co-owner has the right to cash the bond without the knowledge or consent of the other owners. Savings bonds with this title pass to the surviving co-owner(s) without going through probate. The savings bonds, on the other hand, become part of the estate of the last owner when he or she dies, and must be probated unless there is further estate planning in place to avoid it.
Make a choice for a recipient. Another method is to use the TreasuryDirect website to name a beneficiary with the US Treasury Department. The savings bond will not need to go through probate if you do this because the beneficiary you’ve designated will automatically become the owner when you die. The beneficiary must also open a TreasuryDirect account, but once that is done, the recipient will just have to deal with a simple process to transfer ownership of the bond after you die. This beneficiary selection will even take precedence over any clause in your will that contradicts it. This may be acceptable to some beneficiaries, but it may not be the ideal option for individuals who have a tendency to spend money foolishly or who have a large number of creditors who may seek to enforce their claims against the bonds.
Establish a relationship of trust. You can create a trust and transfer title of the savings bond to the trust if you want to continue to profit from the savings bond without naming a beneficiary with the Treasury Department yet avoid probate. Beneficiaries named in the trust can profit from the savings bond, and the trustee can be someone you trust to administer the savings bonds. When savings bonds are kept by a trust, you can keep financially irresponsible beneficiaries from cashing and spending the bonds until the trust’s provisions allow them to be paid to them. Furthermore, certain forms of trusts might shield your savings bonds from your beneficiaries’ creditors.
Savings bonds are often forgotten in a safe deposit box or filing cabinet since they take a long time to mature. The Treasury Department has issued guidance on what to do if the owner of a savings bond passes away.
Electronic savings bonds are a type of savings bond. If the savings bonds were electronic, the person who died was most certainly a TreasuryDirect user. If this is the case, you should call the Bureau of Fiscal Service of the Treasury Department, which will place a hold on the account and provide advice for your unique circumstance.
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 correctly 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 personal representative 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 or the estate is being handled by a court, the personal representative 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, as well as 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.