This and next week’s column are follow-ups to last week’s column concerning the inheritance of paper EE and I Government Savings bonds. The writer is the successor trustee for his deceased parents trusts and he and his siblings inherited both types of bonds from their parents. His question was whether to redeem them or keep them. I suggested keeping them and this column concerns how to distribute bonds of a deceased owner. Some of the bonds were held jointly in the parent’s name or child’s name and some were held in the parent’s trust. Since the process can be a bit confusing, if you hold paper savings bonds you may want to place this and next week’s column with the bonds or give them to your intended heirs. The TreasuryDirect website, treasurydirect.gov, has a wealth of information but if you are not familiar with the site it can be a bit difficult to navigate.
If you decide to keep the inherited bonds one option is to keep the bonds in paper form. But this just delays the inevitable paperwork and prevents you from naming your own co-owner or beneficiary. You wouldn’t be around but, if you should die before the bonds are redeemed, just think of the fun your heirs will have trying to decide what to do with bonds registered in the names of two deceased persons or still registered in the name of your deceased parent’s trust. You’ll want to terminate the trust at some point so getting all of the assets out of the trust is a worthy goal.
If there is not one established, the first step is for you and your siblings to open up your own TreasuryDirect account. This is done through the above mentioned website.
Distribute the bonds that are registered jointly with your parents and siblings to the named sibling. Each person named on a bond of a deceased holder can have the bond reissued in their own name. EE and I bonds are no longer reissued in paper form; they will be reissued as electronic bonds in TreasuryDirect. Each of you will log into your account and click “Establish a Conversion Linked Account.’’ Click “Manage Direct” and how to convert my paper bonds. You’ll enter the bond serial number, face amount and issue date. The registration will be in your name only, omit the deceased’s name from the registration. Once all of the bonds are listed you will print a “Conversion Manifest,” sign this and send it to the address on the manifest with your unsigned bonds and a certified copy of the deceased owner’s death certificate. In a few weeks you will see the electronic bonds in your conversion account registered in your name only.
At this time you can add co-owners or beneficiaries (payable on death). Any converted bonds will be automatically redeemed at maturity. The proceeds will be placed in your primary account (not your conversion account) and you can either by other securities or have the money transferred to your bank account.
That was the easy distribution; next week, I’ll address the distribution of bonds inherited through a trust.
Holly Nicholson is a certified financial planner in Raleigh. She cannot answer every question. Reach her at askholly.com or P.O. Box 97128, Raleigh, NC 27624