How to Cash a Savings Bond of a Deceased Parent

Considering savings bonds can be purchased for as little as $25, they're an affordable investment tool that many people take advantage of. However, as they can often take years to mature, it's easy for people to forget about them. In some cases, the owner of the bond may pass away before cashing it in. In this case, a legal representative or a beneficiary of the deceased person's estate may be entitled to claim the bonds. The process of cashing in the bonds is relatively straightforward but requires certain steps to be followed. If you encounter any problems, a probate attorney will be able to offer guidance.

Establish the Named Survivor

If one of your parents has passed away, you'll first need to establish who now owns the bonds. If you are already listed as a co-owner of the bonds, then you will now own them in their entirety in the same way you would if you were the original sole owner. If another person is named as a co-owner, the bonds now belong to them. Regardless of whether you have inherited other aspects of your parent's estate, you will not be entitled to cash the bonds if the co-owner is still alive. The co-owner is entitled to cash the bonds in on presentation of proper identification and the deceased person's death certificate. Alternatively, they may wish to hold onto the bond until it reaches maturity. They can also request that the savings bond is reissued into their name, although technically, this isn't required in order for the bonds to legitimately pass to them. If your parent was the sole owner of the bond or if the named co-owner has also passed away, the bonds will become the property of your parent's estate.

Determine the Value of The Bonds

If you are the named survivor of the bond, thenest.com recommends you calculate the bonds worth as a first step. To do this, you'll need the series, denomination, serial number, and issue date. Once you have the necessary information, visit the Treasury Direct website and input the details on their savings bond calculator. You'll then receive confirmation of the current worth of the bond, along with confirmation of whether it's reached full maturity. If it hasn't yet matured, you may want to consider leaving the bond where it is for now.

Cashing in Bonds as the Named Survivor

If you are named as the beneficiary of the bonds or if the bonds have passed to you as a listed co-owner, the process of redeeming them is straight-forward. Series EE, Series E, and Series I bonds can be cashed in at a local financial institution on presentation of proof of identity. If you are named as the survivor of the bond, you will also need to provide a copy of the death certificate. If more than one owner is listed on the bond, certified copies of the death certificates for both parties will need to be provided. The death certificates must be certified or sworn to by the state or local registrar. As per Treasury Direct, you are not required to provide a death certificate for the last-deceased bond owner if the date of death appears in the letters of appointment. You will need to complete and sign the redemption form on the reverse of the bond in the presence of an authorized certifying officer at the bank or financial institution. The certifying officer will also need to sign and stamp or seal the bonds. While most bonds can be cashed immediately, some may be forwarded to Treasury Direct for further processing. As banks are not authorized to cash Series HH and Series H bonds, you will need to send an FS Form 1522 to the below address. If you are not listed as the owner or co-owner of the bond, you will need to include the necessary proof of entitlement.

• Treasury Retail Securities Services
• PO Box 2186
• Minneapolis, MN 55480-2186

Cashing in Bonds With No Named Survivor

If there is no named survivor on the bond, the process is slightly different. You or whoever cashes in the bond will need to prove entitlement. For example, if your parent inherited the bond from another party, you will first need to demonstrate your parent's entitlement to the bond, before proving entitlement to your parent's estate. This can usually be done via a certified copy of the death certificate and evidence that you are the heir to their estate. As wilmingtonbiz.com notes, when a savings bond becomes part of an estate, there are several options:

No Court Involvement

If no other living person is named on the bond and providing the bond is worth less than $100,000 and the estate of your parent has not / will not be administered through a court or settled under special provisions relating to small estates, a copy of the FS Form 5336 must be completed and signed in the presence of a certifying official and sent to one of the below address. You must also include the bond and copies of the death certificates of all named owners.

For Series EE and Series I bonds

• Treasury Retail Securities Services
• PO Box 214
• Minneapolis, MN 55480-0214

For Series HH bonds

• Treasury Retail Securities Services
• PO Box 2186
• Minneapolis, MN 55480-2186

Court Involvement

As noted by pocketsense.com, if no survivor is listed on the bond and if the redemptive value at the time of your parent's death was over $100,000, the estate will need to be administered through the court. Once the court has reviewed the estate, the court-appointed personal representative can cash in the bond by providing evidence of appointment along with a certified copy of the death certificate, a Form FS 1455, and the bond itself. The executor will then distribute the bonds as per the instructions of the court. If the estate has already been administered by a court as standard probate or as a small estate, the beneficiary of the estate can redeem the bond by sending the proof of death, the bond, and a notarized affidavit confirming them as the beneficiary. A Form FS 5394 will also be required if the estate has been left to multiple parties.

Who Pays the Tax?

As the tax implications relating to cashed-in savings bonds can vary according to the case, it's recommended to consult a tax advisor to ensure the appropriate federal taxes are paid at the end of the year. IRS Publications 550, 17, and 559 will also provide guidance on what you may owe.