Savings bonds can be transferred to new owners without probate if they were jointly owned or if the owner named a payable-on-death (POD) beneficiary to inherit them. These bonds can be jointly owned, or they can be registered in POD form, but not both; only sole owners can designate a POD beneficiary. Note: On all Treasury Department forms that are used to transfer ownership of savings bonds, signatures must be “certified” by someone called a certifying officer. It isn’t enough to have the signatures notarized. You can usually find a certifying officer in a bank.
Savings Bonds Owned by One Person
If a savings bond names only one person as the owner, then the bond becomes part of the estate when the owner dies. If the will doesn’t specifically leave the bond to someone, it passes through the residuary clause of the will, or under state law if there is no valid will. If you’re conducting a probate proceeding for the estate, you can claim savings bonds and other Treasury Department securities using Form 1455, Request by Fiduciary for Distribution of United States Treasury Securities. You’ll need to sign it in front of a certifying officer and send it to the Treasury Department with a copy of your letters of administration (issued by the probate court) and a certified copy of the death certificate. If the estate doesn’t go through probate, use Form 5336, Disposition of Treasury Securities Belonging to a Decedent’s Estate Being Settled Without Administration to request that the bond be paid out to whoever is entitled to it, or to you on behalf of the inheritor. Include a copy of the death certificate. If the inheritors are claiming the bonds with a small estate affidavit, include a copy; if you’re using summary probate procedures, include a copy of the probate court’s order. If the value of the bonds in the estate exceeds $100,000, the Treasury Department insists that it go through probate; in most states, an estate that large would have to go through probate anyway.
Jointly Owned Savings Bonds
If a bond was registered in the names of two people, the survivor automatically inherits it when the first owner dies. The survivor has several choices about what to do:
- Do nothing, and redeem the bond later.
- Redeem the bond by presenting it (with ID) at a financial institution that pays savings bonds.
- If the bond is still earning interest and is not approaching final maturity, get it reissued (re-registered) in the survivor’s name alone or with another person.
To get a savings bond reissued, the survivor must send a certified copy of the death certificate, the bond, and Form 4000, Request to Reissue United States Savings Bonds, to a Treasury Department retail securities site; they are listed on the website.
Savings Bonds for Which a Beneficiary Was Named
Savings bonds are often registered in beneficiary form, which means that the owner named a payable-on-death beneficiary to inherit them. Like a surviving co-owner, a beneficiary has three options:
- Do nothing with the bond, and redeem it later.
- Redeem the bond.
- Get it reissued in the beneficiary’s name or with a co-owner or POD beneficiary.
To get a savings bond reissued, the new owner must send a certified copy of the death certificate, the bond, and Form 4000, Request to Reissue United States Savings Bonds, to a Treasury Department retail securities site.
The New Owner’s Taxes
The new owner must report, as taxable income, the interest earned on the bonds for the year the bonds are redeemed, disposed of in a taxable transaction, or reach final maturity, whichever occurs first.