Do savings bonds become worthless when the owner dies?

Thursday, January 13th, 2005
Categorized as: Inheriting and bequeathing US Savings Bonds

My aunt recently presented me with several savings bonds she purchased about 25 years ago. They are made out to her or me, but her social security number is on them while mine is not. Somebody told me that without my social security number on the bonds, I can’t redeem them. They said I have to get her to redeem them, or once she dies, they become totally worthless. Is this true?

Tom’s response

Whoever you talked with was what I refer to as a fountain of misinformation.

If the bonds say “OR” between your name and your aunt’s name, rather than “POD” (payable on death), you are the co-owner and you can redeem them either now or after her death. The Social Security Number on the bond doesn’t mean a thing in terms of who owns or who has the right to cash a savings bond.

Savings bonds never become worthless. If the owner dies, the value passes on to the co-owner or beneficiary. If the owner was a sole owner, the value passes to the heirs of the owner through the owner’s Will, if there is one, or through state or federal estate laws if there’s not.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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June 1, 2010

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Tom Adams

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