Should we add our children’s names to our Savings Bonds?

Thursday, August 31st, 2006
Categorized as: Inheriting and bequeathing US Savings Bonds

My wife and I are elderly and we are wondering if we should change our EE bonds from both our names to add our children’s names so that when we die they will not have any problem cashing them in.

Tom’s response

A Savings Bond can have either one or two names on it – never more. The second name can be a co-owner, who can cash the bond anytime, or a beneficiary, who can only cash the bond after the owner has died.

If you don’t change the current registration, after both you and your wife die the bonds will belong to the estate of the person who died last. A probate court will determine from that person’s will how the bonds are to be distributed along with the rest of the estate’s assets.

If that’s not what you want, one possibility is to have the bonds re-registered so that each bond is split in half (this isn’t possible, however, with some denominations) with one half registered to you and the other half registered to your wife.

Each of you can then add one person as a beneficary to each bond. The beneficiary designation overrides your Will and keeps the bonds out of probate court.

If you go this route, you need to make sure that the Treasury doesn’t call it a taxable event when you split the bonds.

You accomplish this by writing a letter explaining that you and your wife put up the money for the bonds in equal amounts and that you only want to do the split if it’s not taxable. The process is similar to Splitting Savings Bonds after a divorce and uses the same form.

Another possiblity is to start cashing a few bonds each year and buying new ones registered the way you’d like. This means the interest earned by the bonds you redeem will become income to you in the year you cash them and you’ll have to hold back some of the money to pay the taxes.

However, assuming your tax rate is lower than your children’s and that you do this with a limited number of bonds per year, it can be the easiest way to accomplish what you want and it can also save your family tax money.

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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:


On July 8th, 2008 Fred Capo said:

Tom – Is there a way to “gift” savings bonds that I have owned for years to my adult children with no tax consequence to myself? The idea us to have them redeem them at their tax rates? Daughter is presently a student with no income.

On July 9th, 2008 Tom Adams said:

Hi Fred – I don’t recommend it, but the only way to gift the bonds with no tax consequences for you is to die.

If your daughter is a dependent on your tax return, you may be able to take advantage of the college education deduction to avoid the tax.

Tom Adams

On August 21st, 2008 Kay Harvey said:

My mother was coowner #1 on some of my series EE bonds and coowner #2 on others.

She passed away in 2004.

If I want to gift the bonds to her granddaughter (my niece) and have her use the money for her current enrollment in Medical School, how do I do this? If she cashes the bonds, does she claim the interest? Can I do this with both types of bonds, or just the ones that have her deceased grandmother as coowner #1?

On August 22nd, 2008 Tom Adams said:

Kay – whether your mother is #1 or #2 doesn’t make any difference. Since she has passed away, the bonds are now sole-owner bonds and you’re the sole owner.

You can’t transfer responsibility for the taxes to your niece. If you want to gift the money to her, cash the bonds, hold back what you’ll need for taxes, and give her what’s left.

If you transfer the bonds to her rather than cash, you’ll still have to pay the tax up to the date of the transfer yourself, so you don’t gain anything by doing that.

Tom Adams

On September 4th, 2008 Janet said:


I have inherited EE Bonds that were in my fathers living trust with me as co-trustee. I have to have them retitled now that he has passed away. We’d like to use some of these for college for our sons. Can I use them for college (tax free) if they remain in a trust that will now be titled FBO (for the benefit of “myself”) or should I have them taken out of the trust and titled in my name (and/or with them as beneficiary?) or my sons names or does it even matter?? Can I even do this to keep from being taxed on large amounts of EE bond interest, for college (1990 and later EE bonds) ?

I can and will consult with my accountant, but I do know that many people do use bonds as extensively as my father did (he was very conservative and this was his primary investment strategy) so there are lots of little details that many professionals are not very aware of.


On September 5th, 2008 Tom Adams said:

Janet – to be eligible for the college tax deduction, the bond must be registered in the name of the parent. So get them out of the trust and into your name. Kids can be beneficiaries, but not co-owners. Your spouse can be a co-owner.

There’s additional info here.

Tom Adams

On January 5th, 2009 eileen mccaffrey said:

I hold series EE bonds in my name POD my sons name. He has been missing for several years. I am in my 80’s and what will happen to the bonds upon my death? Should I register them in a different way ?

On January 6th, 2009 Tom Adams said:

Eileen – If you die the bonds will legally belong to your son. If he can’t be found to take legal possession of them, the bonds will never be cashed.

You should at a minimum remove his name as the POD. In that case the bonds would go to your heirs as designated in your will.

Alternatively, you can add someone else as the POD on each bond.

Tom Adams

On July 17th, 2009 janice said:


I have bonds that i purchase and deducted from my pay check monthly. I have asked several times that they put the bonds in my daughter’s name only. They did that for a few months, now they are in my name only that should have been in my daughter’s name only. Can my daughter cash them if I sign them over to her, or do i have to do a living will and then she will have to wait till I die?

On July 17th, 2009 Tom Adams said:

Janice – This problem has to do with your employer’s payroll office putting the wrong name on the forms.

You cannot sign the bonds over to your daughter, however, you can have the bonds reissued in your daughter’s name because of your payroll office’s processing error.

Begin by contacting your employer’s payroll office to make sure new bonds are issued in your daughter’s name. Then take up the issue of getting the bonds with the wrong name reissued with the payroll office. If the office insists it can’t do that, use the link here (above, on the right) to contact the Treasury and find out the process it needs to follow.

Tom Adams

On September 22nd, 2009 Carol Cannizzo said:

Is there a limit to cashing bonds not TO AFFECT SOCIAL SECURITY INCOME?

On September 22nd, 2009 Tom Adams said:

Carol – I have to assume you’re asking about income tax on your Social Security Income, not the income itself, because you get the same amount of Social Security regardless of how much Savings Bond income you have.

Yes, if you cash in enough Savings Bonds, the interest you earn could magnify your income to an extent that would cause you to have to pay income tax on some of your Social Security Income.

The actual limit depends on a number of things – the amount of Savings Bond interest, your filing status, and your other income. It’s a bit complicated to go into here, but IRS Publication 915 explains it all in great detail.

Tom Adams

On December 9th, 2009 Andrew Camoroda said:

I have several I and EE bonds in my name with my wife as co-owner. If I died first, would my wife be able to add my daughter’s name as co-owner without tax consequences and will the bonds go to my daughter upon my wife’s death recognizing that my daughter will have to pay taxes on the interest earned when she cashes them in.

On December 10th, 2009 Tom Adams said:

Andrew – the answer to each of your questions is yes.

Tom Adams

On March 27th, 2010 RAMON said:


On March 29th, 2010 Tom Adams said:

Ramon – If any of them are Savings Bonds, the answer is that they are of value to the persons named on the bonds or their heirs and of no value to you. Savings Bonds are the only kind I know anything about.

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 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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