Executor’s options

Tuesday, March 22nd, 2005
Categorized as: Inheriting and bequeathing US Savings Bonds

Can the Executor of an estate choose to cash in and pay taxes on a partial amount of a bond inventory?

Tom’s response

Yes, you can cash have the estate redeem some and pay the tax on those and let the rest pass on to co-owners or beneficiaries. There is also a way to pay all the taxes on the decedent’s final tax return and pass the uncashed bonds on to the heirs.

The process, forms, and best strategies for an Executor to use to save the family money are complex. If the estate has more than $10,000 in Savings Bonds, it will pay you to spend a weekend reading my book. The chapter on issues with inherited Savings Bonds will show you the most efficient and least expensive path through the maze.

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13 Comments

On April 20th, 2008 Nancy F said:

When my grandmother died we learned that she had 6 I-bonds, 3 for each son POD to the other son. My father was acting as the administrator of her estate, but he died before her estate was settled. My uncle took over, and when the estate was settled, the 3 bonds that were intended for my father came to me, as sole beneficiary of his estate. When I tried to cash the bonds, I ran into a problem. The bonds have a note that reads “POD “. As the administrator of my father’s estate, should I be able to cash these bonds? What do I need to do?

On April 21st, 2008 Tom Adams said:

Hi Nancy – because of the way the bonds were registered, they belong to your uncle.

The bonds never belonged to your grandmother and should not have been included in her estate (I doubt they were).

Although she put up the money and had possession of them, your father was always the owner of the three bonds with his name on them. When he died, the POD (“payable on death” or beneficiary declaration) made his brother the owner of those bonds.

You do have to include the bonds in your father’s estate for estate-tax purposes, but only your uncle (or his heirs) can cash the bonds.

Tom Adams

On May 14th, 2008 oscar meiggs said:

My daughter was given a series ee bond by her grandmother. The bond was in her grandmother’s name and her name. Her grandmother is deceased. Will she have any problems cashing it?

On May 15th, 2008 Tom Adams said:

Oscar – If the word “OR” appears their names, your daughter can cash it easily. If the word “POD” (payable on death) appears, she will need a copy of her grandmother’s death certificate.

Tom Adams

On May 15th, 2008 MJ McEachern said:

Over several years my mother purchased savings bonds (I believe that they are series EE)with me as the benificary. She intended that I split them evently with my siblings. My concern is that when they are cashed I will be hit with all the taxes. Is there any way I can transfer ownership without my receiving all of the tax hit. Thank you for your anticipated assistance.

Sincerely
MJ, Midland MI

On May 15th, 2008 Nancy Everhart said:

A friend had purchased some I bonds POD to a friend. She has now died and the friend has not been located by the police or the medical examiner. What can we do with the bonds? Do her next of kin inherit them? They live out of the country so how do they redeem them?

On May 16th, 2008 Tom Adams said:

MJ – You are correct, you will get the bill for all the taxes. You don’t say whether your mother is still alive. If so, she can change the registration – look through this list of posts for the form and information you need. If she has passed, then the only fair thing to do is cash the bonds, hold back what you need for the taxes, and split what’s left.

Nancy – The only thing you can do is turn the bonds over to the lost property department of your state’s Attorney General’s office. Include a note letting them know the first-named owner has died.

Tom Adams

On January 11th, 2009 Lisa B. said:

My ex-husband and I bought EE savings bonds during our marriage. The bonds are in both our names with OR (not and). The bonds are mentioned in our divorce papers and we split them 50/50 at the time of our separation. I cashed my share in several years ago and paid all the due taxes on my share. He died 4 years ago. We have four children together. The oldest childn was named executor of his estate via the court and she has not cashed them. All of the children want to cash in the bonds and get their share. According to the Treasury website, the bonds are now my property upon his death as no POD was named. However, I don’t want to cash the bonds and have to pay the taxes in order for the kids to get their money. How can I assist getting them into the children’s names share & share alike?

On January 12th, 2009 Tom Adams said:

Hi Lisa – It is correct that you are now the legal owner of the bonds. But since that’s not what you want and you have the divorce papers showing that you’re not the owner, you may be able to get the bonds transferred to your children.

I recommend you have your daughter the Executor Ask the Treasury how to accomplish this. She will probably need to submit both the divorce papers and her father’s death certificate. They will tell you what form to use and who should sign it.

Tom Adams

On February 8th, 2010 Mike Welborn said:

Dear Tom:

My Mother passed away in December of 2008 and she has two Series E $25 Savings Bonds that were issued to her Social Security number in 1978. It is my understanding that they are now worth $106 each. I talked to our local bank and they told me that I had to mail them in, they gave me an address but that they would only be worth the purchase price. I am the personal representative for my Mother’s estate and can act on her behalf so is there some way that I can get full value for them.

There was a Savings Bond chain letter going around in the 1970s and she received them as a result of participating in that charade. Can you give me an direction on how I can cash them in?

Thank you,

Mike Welborn

On February 10th, 2010 Tom Adams said:

Mike – The information the bank gave you about chain letter Savings Bonds is correct.

Tom Adams

On March 20th, 2010 ml said:

My father died in 2009, my mother still living. They have numerous savings bonds, and live in a community property state. None of the bonds have been cashed – although some are in my father’s name POD to my mother. Is she required to cash these bonds or can she continue to hold them?

On March 22nd, 2010 Tom Adams said:

ML – Was your father’s estate probated? If so, did the court confirm your mother as your father’s only heir? If not, was this determined some other way?

Assuming she is the heir – it would be rare if she wasn’t – the bonds are hers and don’t need to be cashed, but it would be wise to have the registration changed to her name with her choice of POD.

Tom Adams

Comments Closed

June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on Savings-Bond-Advisor.com. I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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