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What Happens to My Savings Bonds After I Die?


Consider the following scenario. Jane’s mother recently passed away. While going through her mother’s papers, Jane finds an envelope containing several U.S. savings bonds issued to her mother more than 30 years ago.

So what should Jane do with these bonds? Are they part of her mother’s estate? Can Jane simply go to the bank and cash them? Does she have to pay taxes on the accumulated interest?

Here is a brief overview of how the law deals with the death of a savings bond owner. This is not a complete guide, of course, and you should always consult with a qualified Florida estate planning attorney if you have specific questions related to your situation.

How Savings Bond Ownership Works

Let’s start with the basics. A savings bond is a debt instrument issued by the United States government. Bonds are sold for as little as $25 each and typically accrue interest for up to 30 years. The bond owner can elect to defer payment of federal income taxes on this interest until the time the bond is redeemed.

If only one person is named on the savings bond, they are the sole owner. When a sole owner dies, the savings bond becomes part of that person’s probate estate. In many cases, however, there are two people named on a bond. If that is the case, the surviving owner becomes the sole owner, and when they die, the bond passes to their probate estate.

Savings Bonds and Estate Administration

Okay, so now the savings bonds are in the deceased owner’s estate. What does that mean? The answer to this question depends on how the estate is administered. Many Florida estates do not have to go through the formal process of probate administration. For very small estates, the next of kin can simply file an affidavit for “disposition without administration” with the probate court. If the small estate contains savings bonds, the next of kin can then simply file a separate form with the U.S. Treasury to claim ownership of the bonds.

If formal administration does take place, then the personal representative of the estate assumes responsibility for any savings bonds. The personal representative may choose to cash the bonds or distribute them to the people named as beneficiaries in the deceased owner’s will. If the bonds are not redeemed, the Treasury can issue replacement bonds in the name of the new owners. (Note that new bonds are issued electronically rather than in paper form.)

Speak with a Lee County, Florida Estate Planning Attorney Today

What about taxes? As noted above, income tax on the accrued interest is normally deferred until the bonds are actually cashed in. If the bonds are simply reissued to the estate’s beneficiaries, then they will be responsible for paying any tax at the time of redemption. Depending on the type and age of the savings bonds, it may therefore make more sense to have the personal representative cash them and pay the taxes prior to distribution.

If you have additional questions about what happens to your savings bonds or other securities after your death, an experienced Fort Myers estate planning lawyer can offer assistance. Contact the Kuhn Law Firm, P.A., at 239-333-4529 today to schedule a free confidential consultation.


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