Death of a Savings Bond Owner

in Bond

The death of a U.S. Savings Bond holder has some ownership and tax responsibilities for the surviving bond holders. There is a protocol established by the U.S. Treasury in redeeming bonds owned by deceased bond holders. 

When the U.S. Savings Bond has one individual named on the Savings Bond and that person dies it will go to their holdings. The executor or administrator of the deceased holdings is the only person authorized to deal with the bonds after a person's death. When two persons are named and one dies the bond automatically goes to the survivor. When two persons are listed on the bond and they both die, the bond goes to the estate of the last person who died.

There are several choices for the surviving holder of a bond that is named on the bond. The survivor can choose to take no action and hold the bond. They can redeem it. They can also have the bond re-registered to their name and add another person to the U.S. Savings Bond. When there is no survivor named on the bond and there is no court involvement then the person's entitled to the bond should fill out form PD F 5336 with the Department of Treasury to claim the bond. If the bonds are greater than $100,000 then they must be administered. When the estate is settled under a provision relating to Small Estates then the specific persons awarded the bonds may seek proceeds by endorsing the bond. If no person is awarded the U.S. Savings Bond then all persons making a claim should fill out form PD F 5394 with the Department of Treasury. The bond could also have been registered with a payable upon death request with a beneficiary listed. The beneficiary then becomes the sole owner of the security and would receive the proceeds. 

The new owner of the savings bonds should list the taxable interest on their returns when the U.S. Savings Bonds are redeemed. They also need to include the interest when they reach final maturity or are exchanged in an event that causes a tax liability. The interest earning while the deceased was still living should be put on the deceased holder's tax return. 

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Death of a Savings Bond Owner

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This article was published on 2010/03/31